20200410 ICAI RCM - ecpl.liveecpl.live/icai/idtc/gst/ppt/20200410_ICAI_RCM.pdf•Supplier > Director...
Transcript of 20200410 ICAI RCM - ecpl.liveecpl.live/icai/idtc/gst/ppt/20200410_ICAI_RCM.pdf•Supplier > Director...
10/04/20
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ReverseCharge MechanismCA. VINODH KOTHARI ICAI
GST & Indirect
Taxes Committee
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Topics Covered
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• REVERSE CHARGE MECHANISM
STATUTORY PROVISIONS
• NOTIFIED SUPPLIES
• GOODS
• SERVICESRCM
• NOTIFICATIONS
• EXEMPTIONSRELEVANT
• UNDER RCMISSUES
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GSTPAYMENT
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GST PAID BY
SUPPLIER
FORWARD CHARGE
RECIPIENT
REVERSE CHARGE
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LEVY&COLLECTION
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SEC 9(3) – CGST Act - Reverse Charge on Notified Supplies
Government may, on recommendations of the Council,
By Notification
Specify Categories
of Supply of Goods / Services
Tax on which shall be paid on
Reverse Charge Basis
By Recipient of such Goods
/ Services
All Provisions of this act shall apply
to such recipient
Sec 5(3) IGST Act
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LEVY&COLLECTION –SEC 9(3)
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Supplier
•On Notified Goods / Services
•Cannot Charge Tax
•If Charged – Recipient liable to discharge Taxes
•Supplies Under RCM – Exempt Supply –Sec 17(3)
Recipient
•On Notified Goods / Services
•By Notified Recipients
•Pay tax on RCM Basis
•Can Claim ITC Paid on RCM after Payment
Sec 5(3) IGST Act
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LEVY&COLLECTION
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SEC 9(4) – CGST Amendment Act 2018 - Reverse Charge on Unregistered Supplier
Government may, on recommendations of the Council,
By Notification
Specify a class of registered person who
shall,
in respect of Supply of Specified
Categories of Goods / Services
Received From Unregistered Suppliers pay
tax on Reverse Charge Basis as
Recipient of Such Supply
All Provisions of this act shall apply to such
recipient
Sec 9(4) Before 1/2/2019
RCM on Unregistered Purchase by Registered
Person
Notf. 38/2017 CT(R) Dt. 13/10/17
Exemption for RCM on URD
Sec 5(4) IGST Act
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Sec 9(3) & Sec 9(4)
RCM on Notified Supplies
• Notified Supplies of Goods / Services
• Supplier – Registered / Unregistered
• Recipient – Specified in Notification – If Not Registered then should Register and pay RCM
• Original Provision
RCM on Unregistered Supplier
• Notified Class of Registered Person in Respect of Supply of Specified Categories of Goods / Services
• Supplier – Unregistered
• Recipient – Notified Class of Registered Person Supplying Specified Categories of Goods / Services
• Provision Amended vide CGST Amendement Act 2018 Effective 1st Feb 2019
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COMPARISON
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Goods Under Reverse Charge
Sec 9(3) CGST Act / Sec 5(3) IGST Act
Notification No. 4/2017 CT(R) Dt. 28/06/17
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Notification No. 4/2017 CT(R) Dt. 28/06/17
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Goods Under RCM 9(3) / 5(3)Cashew Nuts (Not Shelled or Peeled)
• Supplier > Agriculturist
• Recipient > Any Registered Person
Tobacco Leaves
•Supplier > Agriculturist
•Recipient > Any Registered Person
Bidi Wrapper Leaves (tendu)
•Supplier > Agriculturist
•Recipient > Any Registered Person
Supply of Lottery
•Supplier > SG to Lottery Distributor
•Recipient > Lottery Distributor or Agent
Silk Yarn
•Supplier > Any Person who Manufacturers Silk Yarn from Raw Silk or Silkworm Cocoons
•Recipient > Any Registered Person
Used Vehicles, Seized and Confiscated Goods, Old and used goods, waste and scrap.
• Supplier > CG / SG
• Recipient > Any Registered Person
• Notf.36 /2017 CT(R) dt.13/10/17
Raw Cotton
•Supplier > Agriculturist
•Recipient > Any Registered Person
•Notf.43/2017 CT(R) dt.14/11/17
Priority Sector Lending Certificate
• Supplier > Registered Person
• Recipient > To Another Registered Person
• Notf No 11/2018 CT(R) DT.28/05/18
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Services under Reverse Charge
Sec 9(3) CGST Act / Sec 5(3) IGST Act
Notfication. No. 13/2017 CT(R) dt. 28/06/17
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Notification No. 13/2017 CT(R) Dt. 28/06/17
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Services Under RCM 9(3) / 5(3)1) Supplier > Services by Goods Transport Agency (GTA)(Not Paid GST @ 12%)[Notf. No 22/2017 CT(R) DT.22/8/17]
Recipient
Factory Registered
under Factory
Act Society
Registered under
Society / Other Act
Co-Operative
Society Established under any
Law
Person Registered under GST
Body Corporate
Partnership Firm / LLP
AOP
Casual Taxable Person
‘GTA means any person who provides service in relation to transport of
goods by road and issues consignment
note, by whatever name called'.
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Services Under RCM 9(3) / 5(3)GTA EXEMPTIONS
GTA
EXEMPTION
Agricultural Produce
Single Carriage
< Rs.1500/-
Consideration < Rs.750/-
Milk, Salt, Food Grains, Flour, Pulses,
Rice
Organic Manure
Newspapers or Magazines
Registrar of Newspaper
Relief Material
Defence / Military
Equipment
Notification No. 12/2017 CT(R) Dt. 28/06/17
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Notification No. 13/2017 CT(R) Dt. 28/06/17
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Services Under RCM 9(3) / 5(3)
LEGAL SERVICES
2) Services provided by an individual advocate including a senior advocate or firm of advocates by way of legal
services to
Recipient >Any Business
Entity
3) Services Supplied by
Arbitral Tribunal
In Taxable Territory
“LEGAL SERVICE” means any service provided in relation to
advice, consultancy or assistance in any branch of law,
in any manner and includes representational services
before any court, tribunal or authority.
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Services Under RCM 9(3) / 5(3)
EX
EM
PT
ION
S a) Services provided by Arbitral Tribunal to
an advocate or partnership firm of advocates providing legal services;
Business Entity Aggregate Turnover < Rs.20L / Rs.10L in Preceding FY
CG, SG, UT, Local / Governmental Authority or Entity
[Notf . 02/ 2018-CT(R) dt. 25-Jan-2018]
b) Services provided by a partnership firm of advocates or an individual as
an advocate other than a senior advocate, by way of legal services to
Any Person Other than Business Entity
Business Entity Aggregate Turnover < Rs.20L / Rs.10L in Preceding FY
CG, SG, UT, Local / Governmental Authority or Entity
[Notf . 02/ 2018-CT(R) dt. 25-Jan-2018]
LEGAL SERVICES EXEMPTIONS
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Services Under RCM 9(3) / 5(3)
4) Sponsorship•Supplier > Services provided by any person by way of sponsorship
•Recipient > To any body corporate or partnership firm located in taxable territory
5) Government Services
•Supplier > Services supplied by the CG, SG, Union territory or local authority
•Recipient > Business Entity
•Exclusions
•Renting of Immovable Property
•Services by Department of Posts - speed / express parcel post, life insurance, & agency services provided to a person other than CG, SG or UT or local authority
•services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport
•transport of goods or passengers
5A) Government Services
•Supplier > Renting of Immovable Property by Government
•Recipient > Registered Person
•Notf No 03/2018 CT(R) dt. 25/01/18
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Notification No. 13/2017 CT(R) Dt. 28/06/17
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Services Under RCM 9(3) / 5(3)GOVERNMENT SERVICES & RENTING OF
IMMOVABLE PROPERTY EXEMPTIONS
•Recipient > Business entity Aggregate Turnover up to Rs. 20L in Preceding FY
•Exclusions
•Renting of Immovable Property
•Services by Department of Posts - speed / express parcel post, life insurance, & agency services provided to a person other than CG, SG or UT or local authority
•services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport
•transport of goods or passengers
SERVICES BY CG, SG, OR LOCAL AUTHORITY
•Renting of Residential Dwelling
•Use as Residence
RENTING OF IMMOVABLE PROPERTY
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Services Under RCM 9(3) / 5(3)
6) Director Services
•Supplier > Director of Company or a Body Corporate
•Recipient > to the said Company or Body Corporate
•Analysis :
•Services other than Terms of Contract of Employment (Sch III)
•Directors under RCM
•Non Executive Directors, Nominee Directors, Independent Directors
7) Insurance Agent
Services
•Supplier > Services supplied by Insurance Agent
•Recipient > to any person carrying Insurance Business
8) Recovery Agent
Services
•Supplier > Services Supplied by Recovery Agent
•Recipient > to a Banking Company or a Financial Institution or a NBFC
9) Music Composer, Photographer,
Artist or like Services
•Supplier > Supply of services by a music composer, photographer, artist or the like by way of transfer or permitting the use or enjoyment of a copyright covered U/s 13(1)(a) of Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works
•Recipient > to a music company, producer or the like.
•Amended vide Notf. No. 22/2019 CT(R) dt. 30/9/19
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Notification No. 13/2017 CT(R) Dt. 28/06/17
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Services Under RCM 9(3) / 5(3)
9A) Author Services
•Supplier > Supply of services by an author by way of transfer or permitting the use or enjoyment of a copyright covered U/s.13(1)(a) of The Copyright Act 1957 relating to original literary work.
•Recipient > To a Publisher.
•Not Applicable if :
•Author Registered under GST and opt to pay tax on Forward Charge
•the author makes a declaration, as prescribed in Annexure II on the invoice issued by him in Form GST Inv-I to the publisher.
•Notf. No. 22/2019 CT(R) dt. 30/9/19
10) Overseeing Committee
•Supplier > Supply of Services by the members of Overseeing Committee
•Recipient > to Reserve Bank of India
•Notf. No. 33/2017 CT(R) Dt.13/10/17
11) Direct Selling
Agents Services
•Supplier > Services supplied by Direct Selling Agents other than Body Corporate, Partnership Firm or LLP Firm
•Recipient > to any Bank or NBFC
•Notf No. 15/2018 CT(R) dt. 26/07/18
12) Banking Facilitator
Services
•Supplier > Services Supplied by Banking Facilitator
•Recipient > to a Banking Company
13) Business
Correspondent Services
•Supplier > Supply of services by Agent of Business Correspondent
•Recipient > to a Business Correspondent.
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Services Under RCM 9(3) / 5(3)
14) Security Services
• Supplier > Security Services by any person other than Body Corporate
• Recipient > A Registered Person
• Not Applicable to :
• Department or Establishment of CG / SG / UG
• Local Authority / Governmental Agencies taken Registration Under Sec 51 (TDS)
• Registered Person under Composition Scheme
• Notf No : 29/2018 dt.31/12/18
15) Renting of Motor Vehicle
• Supplier > Services provided by way or Renting of Motor Vehicle designed to carry passengers where the cost of fuel is included in the consideration charged by Any person, other than a body corporate who supplies the service to a body corporate and does not issue an invoice charging CGST @ 6% to the service recipient
• Recipient > Any Body Corporate
• Amended vide Notf. No : 29/2019 dt.31/12/2019
16) Lending of
Securities Services
• Supplier > Services of lending of securities under Securities Lending Scheme, 1997 by Lender i.e. a person who deposits the securities registered in his name or in the name of any other person duly authorised on his behalf with an approved intermediary for the purpose of lending under the Scheme of SEBI
• Recipient > Borrower i.e. a person who borrows the securities under the Scheme through an approved intermediary of SEBI.”.
• Notf. No : 22/2019 dt.30/09/19
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Notification No. 10/2017 IT(R) Dt. 28/06/17
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Services Under RCM Sec 5(3)
Supplier > Services Supplied by a person located in a non taxableterritory by way of transportation of goods by vessel from place outside India upto the customs station of Clearance in India
Recipient > Importer located in Taxable Territory
2) Transportation Of Goods By Vessel
Supplier > Any Service Supplied by any person who is located in a non taxable territory
Recipient > any person other than non-taxable online recipient
1) Non Taxable Territory
SERVICES UNDER IGST RCM(Additional Category)
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Notification No. 7/2019 CT(R) Dt. 29/03/19
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RCM on Unregistered Suppliers 9(4)N
atu
re o
f S
up
ply
> Supply of Such Goods / Services which constitute shortfall from the minimum value of goods or services or both
> required to be purchased by a promoter for construction of project, in a FY(or part of the FY till the date of issuance of completion certificate or first occupation, whichever is earlier)
> as prescribed in Notf. No. 11/ 2017- CT(R) dt. 28/06/17, at items (i), (ia), (ib), (ic) and (id) against S. No 3 in the Table, as amended.
Re
cip
ien
t > Promoter
> “promoter” shall have the same meaning as assigned to Sec 2 (zk) of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016)
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RCM on Unregistered Suppliers 9(4)
Nat
ure
of
Su
pp
ly
> Cement falling in 2523 in 1st Sch to Customs Tariff Act, 1975
>which constitute the shortfall from the minimum value of goods or services, or both required
> purchased by a promoter for construction of project, in a FY (or part of FY till the date of issuance of completion certificate or first occupation, whichever is earlier) as prescribed in Notf. No. 11/ 2017-CT(R) dt.28/06/17 at items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table as amended
.
Re
cip
ien
t > Promoter
> “Promoter” shall have the same meaning as assigned to Sec 2 (zk) of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016)
>“Project” shall mean a Real Estate Project (REP) or a Residential Real Estate Project (RREP);
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RCM on Unregistered Suppliers 9(4)N
atu
re o
f S
up
ply > Capital goods under any
chapter in the 1st Sch Customs Tariff Act, 1975
> supplied to a promoter for construction of a project on which tax is payable or paid at the rate prescribed for items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, in Notf. No. 11/ 2017- CT(R) dt.28/06/17, as amended.
Re
cip
ien
t > Promoter
> “Promoter” shall have the same meaning as assigned to Sec 2 (zk) of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016)
>“Project” shall mean a Real Estate Project (REP) or a Residential Real Estate Project (RREP);
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E-COMMERCE OPERATOR SEC. 9(5)
The government may, on the recommendation of the Council, by notification
Specify categories of services the tax on intra-state supplies of which shall be paid by E-Commerce Operator
If such services are supplied through it,
And all the provisions of this Act shall apply to such E-Commerce Operator
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Notification No. 17/2017 CT(R) Dt. 28/06/17
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NOTIFIED E-COMMERCE OPERATOR SEC. 9(5)
Services by way of transportation of passengers by a radio taxi etc.
Services by way of renting of Hotel Accommodation
Services by way of House Keeping such as plumbing, carpentering etc
[Notf. No 23/2017 CT(R) dt. 22/08/17]
Not Applicable if supplier of such service is liable to be registered.
ISSUES UNDER RCM
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ISSUES UNDER RCM
Tax to be paid by Recipient
Self Invoice, Payment Voucher U/s. 31(3)
Procedural Lapses
Area of Litigation
ITC Available once recipient makes payment
in cash
Mandatory Registration
Sec 9(3) Recipients
No Partial Reverse Charge 100% tax to be paid by
Recipient
Payment of Taxes Under Reverse Charge only by
Cash
Sec 9(4) applicable only for Specified Category of
Registered Dealers
Invoice level information in respect of all supplies
attracting reverse charge, rate wise, are to be
furnished separately in column 4B of GSTR-1
Advance paid for reverse charge supplies is also
leviable to GST
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CA VINODH KOTHARI
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