under RCM How composition dealer will be affected by RCM? What if the supplier is not registered?

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1 Step by step compliances under RCM How composition dealer will be affected by RCM? He may have to prepare self tax invoice being a recipient He will have to put such inward supply in GSTR 2 Also to ensure the payment by e cash ledger What if the is not registered? Such inward supply covered under RCM will not be auto populated for GSTR 2 recipient Step 1 Issuance Invoice by recipient for all reverse charge supplies. Note - Does not apply in case where registered makes outward supply the notified goods or services or both. In such a case, since the is registered, he will issue the said invoice (tax invoice) and therefore the recipient is not required to issue invoice. Remarks (a) It has been decided that ` 5000 per day exemption will be given in respect intra-state supplies received from unregistered person. For supplies above this amount, a monthly consolidated bill can be raised. (b) Take care- As there are one or more purchase invoices from unregistered person, so such invoice(s) will show the only and will be without any tax (no or 0 tax) because unregistered person cannot collect the tax. As per GST rules you (being, registered recipient) should add appropriate tax amount while preparing tax invoices before filing. (c) For that, the buyer (being, registered recipient) will have to ascertain the GST rate for each and every goods/ service it buys from an unregistered party and then pay this tax as RCM. (d) Provided further that where an invoice is required to be issued under clause (f) sub-section (3) section 31, a registered person may issue a consolidated invoice at the end a month for supplies covered under sub-section (4) section 9, the aggregate such supplies exceeds rupees five thousand in a day from any or all the s. (Refer rule 46 CGST Rules, 2017) 34

2 Step by step compliances under RCM 35 Step 2 Issuance Payment Vouchers by recipient at the time payment in respect reverse charge supplies. Step 3 Determination time supply goods/ services/ both in such cases. Step 4 Upload invoice particulars in GSTR-2 (Inward supply) for reverse charge liability. Step 5 Payment GST by E-cash ledger as credit is not permitted to be utilized for reverse charge liability. Step 6 Claim Input Credit taxes paid under reverse charge subject to eligibility as per the Act. faq that could help you FAQ1. What is the invoice or other documentation required in case reverse charge cases? Ans. In case categories goods or services that are notified, on which tax is payable on reverse charge basis, the recipient the goods or services would be required to issue a payment voucher at the time making payment to the - Sec. 31(3)(g). Further, where the tax liability is cast on the recipient for the reason that the goods or services is an unregistered person, the recipient will be required to issue an invoice in respect such goods or services - Sec. 31(3)(f).

3 rcm impacts on filing the Returns Can GSTR 3 be filed without the payment by e cash ledger? No Whether invoice details are necessary for RCM supply? If is not registered, then registered recipient shall have to issue self tax invoice. Author s note Note-1 Before you read this Chapter - As we know, that every registered person has to file form outward supply by 10 th next month (GSTR-1) and to file form inward supply by 15 th next month (GSTR-2). So, here the question arises whether who is making supply goods and services under RCM will also have to do something in GSTR-1? Naturally yes, if he is registered (no question to talk for unregistered ) otherwise how it shall be matched with GSTR-2 being filed by recipient. Note-2 How to read this Chapter - We will give you the glimpse the form hitting the reverse charge supply particularly one by one, reader should go through the same as per the sequence given in the below table: Applicability Forms Returns/Statements for Supplier and Recipient S.No. Supplier Recipient Registered/ Form for Registered/ Form for recipient Unregistered Unregistered 1 Registered Form GSTR-1 Registered Form GSTR-2 2 Unregistered NA Registered Form GSTR-2 3 Registered Form GSTR-1 Unregistered NA 4 Unregistered NA Unregistered NA Note: There is no requirement to file return for unregistered person in this Act. 36

4 rcm impacts on filing the Returns 37 Case 1) Registered taxable person supplying notified goods and services(which are notified by government on recommendation GST council) to registered recipient. Registered taxable person, who is making outward supply notified goods/services, where tax has been paid by recipient on reverse charge basis, then it should be reflected in Table 4B FORM GSTR-1 (Form for Outward supply), as shown below: Extract form GSTR-1 (For Registered Supplier) 4. able outward supplies made to registered persons (including UIN-holders) other than that supplies covered by Table 6 (Amount in ` for all Tables) GSTIN/ UIN Invoice details Rate able Amount Place Supply A. Supplies other than those (i) attracting reverse charge and (ii) supplies made through e-commerce operator 4B. Supplies attracting tax on reverse charge basis 4C. Supplies made through e-commerce operator attracting TCS (operator wise, rate wise) GSTIN e-commerce operator Similarly, the registered recipient is making inward supply notified goods/services, where tax has been paid by recipient on reverse charge basis, then it should be reflected in Table 4A FORM GSTR-2 (Form for inward supply), as shown below:

5 38 Div. 1 : Reverse Charge Mechanism Extract form GSTR-2 (Registered Recipient) 4. Inward supplies on which tax is to be paid on reverse charge GSTIN Invoice details Rate able tax Amount CESS Place supply Whether input or input service/capital goods (inc. plant and machinery)/ineligible for ITC Amount ITC available A. Inward supplies received from a registered (attracting reverse charge) 4B. Inward supplies received from an unregistered 4C. Import service Case 2)Unregistered taxable person supplying notified goods and services (which are notified by government on recommendation GST council) to registered recipient. In this case, unregistered taxable person is making outward supply notified goods/ services,where tax has been paid by recipient on reverse charge basis, but since he is unregistered he is not required to file returns under GST. But, the registered recipient is required to show the details his inward supply (from unregistered ), in Table 4B FORM GSTR-2 as shown below:

6 Extract form GSTR-2 (Registered Recipient) 4. Inward supplies on which tax is to be paid on reverse charge GSTIN rcm impacts on filing the Returns 39 Invoice details Rate able Amount Integratetral Cen- tax CESS Place supply Whether input or input service/ Capital goods (incl. plant and machinery)/ Ineligible for ITC Amount ITC available A. Inward supplies received from a registered (attracting reverse charge) 4B. Inward supplies received from an unregistered 4C. Import service Note: - In case section 9(4) CGST Act or 5(4) IGST Act, where unregistered person supplies taxable goods/services (not notified goods/services section 9(3) CGST Act or 5(3) IGST Act) to registered person, reverse charge mechanism applies, and the same provision as mentioned above shall apply. In other words, unregistered taxable person is not required to file return his outward supply, but the registered recipient is required to show details his inward supplies made from unregistered person in Table 4B FORM GSTR-2. Case 3) Import goods Import goods is a inter-state supply goods, hence, IGST along with basic custom duties and cess levied on the same. (Section 5 IGST Act, 2017). Since, the exporter is located outside India, therefore, it can be construed as he is unregistered under Indian GST law, hence reverse charge mechanism will apply and importer will be liable to pay GST. Importer goods is required to show details his inward supply goods in Table 5A FORM GSTR-2 as shown below:

7 40 Div. 1 : Reverse Charge Mechanism Extract form GSTR-2 (Registered Recipient) 5. Inputs/Capital goods received from Overseas or from SEZ units on a Bill Entry GSTIN Details bill entry Rate able Amount Whether input/ Capital goods (inc. plant and machinery)/ Ineligible for ITC Amount ITC available A. Imports 5B. Received from SEZ Port code + No. BE=13 digits Assessable Value Case 4) Import services Import services is a notified service covered under section 5(3) IGST Act, in case which tax would be payable by the recipient service on reverse charge basis. In return context, Importer service is required to show details his inward supply in Table 4C FORM GSTR-2 as shown below: Extract form GSTR-2 (Registered Recipient) 4. Inward supplies on which tax is to be paid on reverse charge GSTIN Invoice details Rate able Amount tax Place supply Whether input or input service/capital goods (incl. plant and machinery)/ Ineligible for ITC Amount ITC available A. Inward supplies received from a registered (attracting reverse change) 4B. Inward supplies received from an unregistered 4c. Import service