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RCM by composition dealer

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Surya Rockz

21 Points Posted on 23 August 2020

If composition dealer purchased goods from registered dealer then as a composition dealer wheather I need to pay tax under RCM or not?

Replies (2)

Quick Summary

This discussion clarifies whether a composition dealer needs to pay GST under the Reverse Charge Mechanism (RCM) when purchasing goods from a registered dealer. Generally, if a registered dealer charges GST on their invoice under Forward Charge Mechanism (FCM), the composition dealer does not need to pay RCM. RCM typically applies when a registered person receives taxable goods or services from an unregistered person, making the receiver liable for the GST.

Sagar Patel

Tax and Business Consultant

5533 Points Posted on 23 August 2020

If Composition dealer Purchase Goods from registered Dealer than registered dealer itself charge GST in invoice to composition dealer under FCM, except Goods are under RCM.

So, not required to pay RCM.

Vijayprakash P

776 Points Posted on 23 August 2020

Reverse Tax Mechanism(RCM) is applicable when a registered person receives taxable goods or services from a person who is not registered then the receiver of goods or services is required to pay GST on such goods or services as per taxes applicable to such goods or services. (Section 9(4) ). In this case RCM is not applicable.