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What do you understand by reverse charge mechanism, understand the whole concept of reverse charge mechanism and goods transport agency(GTA)?

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Hi guy’s

This is Ravi Verma, in this article we will know about the reverse charge mechanism under the GST ACT.

Let’s Start

What is RCM (reverse charge mechanism)?

If we take service from someone who collects tax from us but that person does not deposit that tax to the government, then to solve this problem the government implemented a new rule which we call reverse charge mechanism.

Under this, if we take service from a person who takes tax from us but that person does not deposit tax to the government, then in such a situation we have to deposit that tax to the government ourselves.

All these persons have been kept under the reverse charge mechanism.

  1. Lowyer
  2. GTA (Goods & Transport gency) Opting 5% tax regime.
  3. the person who is the don.
  4. The person who resides outside India and we have taken goods/services from him, which in other words we call export service
  5. A Farmer
  6. sale Use vehicles
  7. lottery
  8. silk yarn
  9. tambaku

Who does not come under the reverse charge mechanism?

  1. An Individual person

Under Stand about Goods Transport Agency(GTA )?

Under this, all the services of transport are given, and a reverse charge mechanism is implemented in it.

Two types of tax options are given under GTA

  1. Opting 5% tax regime:- If a person opts for 5% tax regime, then he cannot take Input Tax Credit (ITC) and the rule of RCM is applicable.
  2. Opting 12% tax regime:- If a person opts for a 12% tax regime, then he can take Input Tax Credit (ITC) and the rule of RCM is not applicable in this.

Some Important points*******

  1. Any factory register in factory act 1948:- If a factory is registered under the Factories Act 1948, if it has taken service from a GTA, then the rule of RCM is applicable to it, then it has to take the register in GST and pay the RCM amount. To pay RCM even if the turnover of the factory is less than 20 lakhs, it will have to take registration in GST and pay RCM.
  2. Any society register in society act 1860:-If a society is registered under the Societies Act 1860, if it has taken service from GTA, then the rule of RCM is applicable to it, then it has to pay RCM amount.
  3. Any co-operative socity estibleshed by or under any law:- (under section 24) If a co-operative is registered under the co-operative Act, if it has taken service from GTA, then the rule of RCM is applicable to it, then it has to pay the RCM amount.
  4. Any body corporate estibleshed by or under any law:- (under section 24) If a body corporate is registered under the corporate Act, if it has taken service from GTA, then the rule of RCM is applicable to it, then it has to pay the RCM amount.
  5. Any partner ship firm wether registered or not under any law including association of persons:- (under section 24) If a partnership firm is registered or not under any law including the association of persons, if it has taken service from GTA, then the rule of RCM is applicable to it, then it has to pay the RCM amount.
  6. Any casual taxable person:- If a taxable person, if has taken service from GTA, then the rule of RCM is applicable to it, then it has to pay the RCM amount.

Thanks,

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