GST Registration compulsory for Reverse Charge Liability

Under GST law, the liability to pay tax has been conferred upon the supplier of goods or services in general. However, there are certain cases mentioned under section 9(3) of the CGST Act/ Section 5(3) of the IGST Act, where the liability to pay tax has been conferred upon the receiver of such goods or services. This is known as “Reverse Charge Mechanism”. Refer article on “Reverse Charge Mechanism under GST” on this link: https://www.taxwink.com/blog/rcm-under-gst

In this regard, the Government on the basis of recommendation of the GST Council has specified a number of goods or services on which the recipient shall be liable to pay tax under reverse charge mechanism. For comprehensive list of goods and services covered under RCM, you may refer the article “List of Goods and services under RCM in GST” on this link: https://www.taxwink.com/blog/goods-and-services-under-rcm

Similarly, Section 9(4) of the CGST Act/ Section 5(4) of IGST Act empowers the Government to specify a class of registered persons who shall be liable to pay GST on goods or services received from an unregistered supplier under RCM.

According to clause (iii) of Section 24 of the CGST Act, the persons who are required to pay tax under RCM shall be required to register under GST mandatorily. It should be noted that such persons are required to compulsory register under GST irrespective of their aggregate turnover.

For example: M/s BT International Private Limited is in the business of wholesale tea supplies in the state of Assam. It’s turnover is only Rs. 10 Lakhs. It procures GTA (Goods Transport Agency) services for delivery of goods. The company is required to pay GST under RCM on GTA services. Therefore, it shall be required to register under GST even if its turnover is below the turnover threshold limit.

For more understanding you may refer the following articles. Please click below:

• Applicability of RCM in case of import of Services
• GST on Rent of Residential Property
• RCM on renting of motor vehicle services received by body corporate
• GST on GTA Services
• RCM on purchases from unregistered suppliers under GST

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