Reverse charge list of goods and services under GST
List of Services under Reverse charge
What is reverse Charge?
GST is normally collected by the person selling the goods and services. In some cases, however, GST is collected by the purchaser, not by the seller. This is called Reverse Charge Mechanism, RCM in short.
This means that the responsibility of paying tax is on the person who is purchasing/using the goods/services rather than the person who is selling/providing the goods/services.
What is the Reverse Charge Mechanism(RCM) under GST?
Reverse Charge means the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply.
There are 2-types of reverse charge scenarios provided in law. First is dependent on the nature of supply and/or nature of supplier. This scenario is covered by section 9 (3) of the CGST/SGST (UTGST) Act and section 5 (3) of the IGST Act.
As per CGST Amendment Act 2018 w.e.f. 01 Feb 2019, Sec 9(4) has been amended to refer only to specified goods and services as notified by the supplies. But the list is yet to be notified, after which this provision Sec 9(4) shall apply to all such supplies notified.
This means that the responsibility of paying tax is on the person who is purchasing/using the goods/services rather than the person who is selling/providing the goods/services.
For sale through E-commerce operators such as Uber, Ola, etc. the tax is not collected by the seller but collected by the e-commerce operator. Such cases are not called Reverse charges.
The government keeps updating this list from time to time where certain goods & services are added to the list of supplies that are covered by the Reverse Charge mechanism (RCM).
List of services under reverse charge in GST and its applicability
For services provided by e-commerce operator
The recipient of services is responsible for paying tax in the case of services provided by e-commerce operators.The representative of such an e-commerce operator will be responsible for paying tax if the assessee has no physical presence in the taxable area. If there is no representative, then the assessee has to appoint one who will be liable to pay GST.
For services
A list of services for which the reverse charge mechanism under GST will be applicable has been released by CBEC.
S.NO | Provider | Recipient |
1 | Agencies that carry goods | Anyone who is a casual taxpayer, a corporation, a partnership, a society, a factory, or someone else who is registered under the CGST, SGST, or IGST Act |
2 | Recovery Agent | Any type of financial institution, including a bank or NBFC |
3 | A director of a company or body corporate | A company or a body corporate |
4 | An individual or group of advocates, An arbitral tribunal | Any business entity |
5 | An insurance agent | Any individual doing an insurance business |
Supply of goods under RCM
S.NO | Description of supply of goods | Supplier of goods | Recipient of goods |
1 | Cashew nuts, not shelled or peeled | Agriculturist | Any registered person |
2 | Silk yarn | anyone who produces silk yarn from raw silk or silk worm cocoons for the purpose of supply | Any registered person |
3 | Raw cotton | Agriculturist | Any registered person |
4 | Used cars, confiscated and seized products, old and used items, garbage, and scrap | Central Government, State Government, Union territory or a local authority | Any registered person |
Supply of services under RCM
S.NO | Description of supply of services | Supplier of goods | Recipient of goods |
1 | Any service provided to anyone other than a non-taxable online recipient by a person who is located in a non-taxable territory | Any individual who resides in a non-taxable region | Any person located in the taxable territory other than non-taxable online recipient. |
2 | GTA services | Goods Transport Agency (GTA) who has not paid integrated tax at the rate of 12% | Any factory, society, cooperative society, registered person, body corporate, partnership firm, casual taxable person; located in the taxable territory |
3 | Legal services by advocate | An individual advocate including a senior advocate or firm of advocate | Any business entity located in the taxable territory |
4 | Services supplied by an arbitral tribunal to a business entity | An arbitral tribunal | Any business entity located in the taxable territory |
5 | Services provided by way of sponsorship to any body corporate or partnership firm | Any person | Any body corporate or partnership firm located in the taxable territory |
6 | Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding, – (1) renting of immovable property, and (2) services specified below- (i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central Government, State Government or Union territory or local authority; (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; (iii) transport of goods or passengers. |
Central Government, State Government, Union territory or local authority |
Any business entity located in the taxable territory |
7 | Services supplied by a director of a company or a body corporate to the said company or the body corporate | A director of a company or a body corporate | The company or a body corporate located in the taxable territory |
8 | Services provided by an insurance agent to anyone conducting business in the insurance industry | An insurance agent | Any person conducting insurance business who resides in the taxable area |
9 | Recovery agent services provided to a banking firm, financial institution, or non-banking financial company | A recovery agent | A business that provides financial services and is either a bank, a financial institution, or a nonbanking financial business. |
10 | Services provided from a location outside of India up to the customs station of clearance in India by a person who is located in nontaxable territory using a vessel to convey commodities | A person located in non-taxable territory | Importer, as defined in clause (26) of section 2 of the Customs Act, 1962(52 of 1962), located in the taxable territory |
11 | Providing services to a publisher, music company, producer, or the like in exchange for transferring or allowing the use or enjoyment of a copyright protected by section 13(1)(a) of the Copyright Act of 1957 relating to original literary, dramatic, musical, or artistic works | Author or music composer, photograph her, artist, or the like | Publisher, music company, producer or the like, located in the taxable territory |
12 | Members of the Overseeing Committee providing services to the Reserve Bank of India | Members of the Oversight Committee formed by the Reserve Bank of India | Reserve bank of india |
Important details:
Under GST, there will be no partial reverse charge. If the reverse charge technique is used, the recipient will be responsible for paying 100% of the tax.
- The recipient of the services will be responsible for paying the tax in the case of B2B import of other services.
- In the case of B2B import of goods, the tax shall be payable by the recipient of goods
