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What is Reverse Charge Mechanism (RCM) under GST?

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Sakshi Shah

GST
ITC
Reverse Charge Mechanism
Last updated on April 23rd, 2021

Under any tax regime, a seller is liable to pay tax to the government. In GST, the supplier of goods or services collects GST from the buyer and pays it to the GST department while filing the GST Return. Under Reverse Charge Mechanism (RCM) in GST, the buyer is liable to pay GST to the government. It is applicable on sale of notified goods and services or specified situations.

Normal Mechanism

Reverse Charge Mechanism (RCM)

GST under Reverse Charge Mechanism

FAQs

How can a buyer pay GST under reverse charge if he/she does not have a GST registration?

If a person is required to pay GST as per the provisions of the reverse charge mechanism, it is compulsory to take registration irrespective of the turnover. The threshold limit of Rs.20 lacs is not applicable in these cases.

Can I claim Input Tax Credit of the tax paid under the Reverse Charge Mechanism?

If the buyer has paid GST under reverse charge, he can claim the input tax credit of the tax paid if he/she has satisfied all conditions to claim ITC. The Input Tax Credit can be claimed by the buyer and not seller.

Got Questions? Ask Away!

  1. Hey @HarshitShah

    Goods/sectors that are out of the GST ambit include alcohol and specified petroleum products like petroleum crude, high-speed diesel, motor spirit, aviation turbine fuel and natural gas. Alcohol for human consumption continues to attract state excise duty and VAT. Tobacco and tobacco-based products attract both excise duty and GST. Taxes such as stamp duty, toll tax, road tax, electricity duty etc. are not part of GST.

    Hope this helps!

  2. Hey @HarishMehta

    Customs duty and cess as applicable along with IGST+ GST compensation cess. IGST and GST compensation cess shall be paid after adding all customs duty and customs cess to the value of imports.

    Hope this helps!

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