GST in reverse charge

As of now, Govt has not specified the services to be covered under GST. However, If a registered person purchases goods / avails services from unregistered person then he will be required to pay GST under reverse charge basis. Moreover, the requirement is such that the person paying under reverse charge is also required to issue invoice of good purchased / services availed. Such transactions are to be reported in the return and have to pay tax by 20th of the following month. and such taxes paid will be eligible for credit in the subsequent month. Thereby blocking the working capital to the extent of taxes paid under reverse charge mechanism.

Reverses charges means if any taxable person under G S T, purchase any item, which is taxable under G S T, ,from the non taxable person, he has to pay gst ,for such purchaes, and issue tax invoice.

There is a confusion:

Suppose Mr A has turnover of Rs.5 Lakhs and hence he has not taken registration under GST.

Now Mr. B, a registered person under GST buys Goods worth Rs.1 Lakhs from Mr A , Whether such purchase comes under reverse charge?

If Yes, then it will be a headache for Mr. B

If No, then can anyone explain how it is possible for unregistered person to make taxable supply?

Yes, this is covered under reverse charge as there is no threshhold limit for reverse charge and obviously it will be a headache.

That Simply means if Registered person buys a 5 Rs. Pen or 10,000 Rs Mobile for office he will be asked to pay GST and maintain accounting record of each "activity".

Great 

Dear Rohit

              In this case, Mr B has to pay reverses charegs on the purchases from Mr A, who is unregistered.

Mr. Rohit

if you are registered deler , then you have to purchase from registered dealer. However you wll be entitled for G S T refund for that purchase only, which you further resale 

Dear KC Agarwal Sir,

I think you are talking about Input Credit.

Unlike Service Tax where Reverese Charge (Partial or Full) were on specified categories, GST provisions will push (force) Registered dealers to buy from Registered Suppliers.

In GST There is No Concept of Sale/Purchase, Here is Supply Inward or Supply Outward.

When a Distributor Supply Goods to a Un-Registered Retailer and Retailer Returnd Goods unwanted or Expired/Breakages then Distributor has to take it as Supply Inward with Reverse Charge. Means Un-Registerd Retailer will be in Loss of Double Tax. (1st He can not take credit of Inward Supply and 2nd Reverse Charge Can be Deductable by Distributor for Return).

Means Govt. Want Nobody should be out of GSTN Network.

Originally posted by : Nilkanth Muley
	In GST There is No Concept of Sale/Purchase, Here is Supply Inward or Supply Outward. When a Distributor Supply Goods to a Un-Registered Retailer and Retailer Returnd Goods unwanted or Expired/Breakages then Distributor has to take it as Supply Inward with Reverse Charge. Means Un-Registerd Retailer will be in Loss of Double Tax. (1st He can not take credit of Inward Supply and 2nd Reverse Charge Can be Deductable by Distributor for Return). Means Govt. Want Nobody should be out of GSTN Network.

Supply goods on "Sale on approval basis".

In Pharmaceutical / FMCG Sector Goods Return transaction happen at multiple times from any

Invoice. Supply can not be On Aproval basis here. Pharmaceutical Distributor has to take return Expired/Breakage/Spoild Goods also from Retailer due to their Association Pressure.

Originally posted by : Nilkanth Muley
	In Pharmaceutical / FMCG Sector Goods Return transaction happen at multiple times from any Invoice. Supply can not be On Aproval basis here. Pharmaceutical Distributor has to take return Expired/Breakage/Spoild Goods also from Retailer due to their Association Pressure.

I do understand your concern, like expired stock.

Though exchange of goods will come under supply, i have reservations about stock return as these are not for "consideration".

I believe these things are for Industry representatives to bring to notice of GST Council/ Government.

Also many people like me and you are enhancing knowledge so that we find solutions to problem that come up.

Disposal of Goods is also come under Supply Defination. Confirm by Mr.Upender Gupta CA IRS

GST Council Member.

That is for disposal of "Business Assets" on which ITC was availed. [Schedule 1 CGST Act, 2017]