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Reverse charge is a mechanism whereby the recipient of the services, or goods or both is charged instead of the supplier. Except for the reverse charge mechanism usually, the supplier of goods or services pays the tax on supply of goods/services/both. In Reverse Charge, the receiver becomes liable to pay the tax, which results in reverse changeability.
In the case where an unregistered dealer supply good and /or services to a registered dealer in that case reverse charge are charged whereby the applicable GST on such goods and/or services are required to be paid directly by the receiver to the Government instead of the supplier.
That is in this case the registered dealer who has received the goods/services from the unregistered dealer is required to pay GST under Reverse Charge Mechanism has to do self-invoicing for the purchases made.
What to be paid as GST tax by the registered dealer?
The buyer (i.e. the registered dealer) has to pay IGST.
The buyer has to pay CGST and SGST has to be paid.
If services are supplied by an e-commerce operator, then, in that case, the Reverse Charge Mechanism will be applicable to the e-commerce operator. The e-operator is liable to pay GST.
There are cases wherein the e-commerce operators do not operate on physical presence basis in the taxable territory; in such case, the person representing such e-commerce operator for it shall be liable to pay tax. In cases where there is no representative, the operator will appoint a representative who will be liable to pay GST.
There is a list of goods and services on which reverse charge is applicable which has been issued by CBEC in that case reverse charge is applied.
The time of supply will be the earliest of the following dates:
In cases, there is a situation whereby it is not possible to determine the time of supply, in that case, the time of supply shall be the date of entry in the books of account of the recipient.
Self-invoicing is required to be done by the registered dealer who has purchased good/ and services from an unregistered supplier AND such purchase of goods or services falls under list goods/services of reverse charge.
The reverse charge, in this case, is required to be paid by the purchaser as the supplier of goods/services is not a registered dealer and cannot issue a GST-compliant invoice. Hence, the self-invoicing by the purchaser of the goods/services become necessary.
Details required to be filled in self-invoicing are as given below:
As it is self-invoicing and the registered dealer has not received any invoice number from the Supplier of goods/services, in that case, enter the serial number of the bill into the field marked ‘Invoice Serial Number’ create your own new one, add a serial number on your own. The registered dealer shall create and maintain a serial number series for reverse charge bills, for easier invoicing.
Enter the ‘Invoice Date’ based on time of supply calculated in accordance with the rules and regulation made in GST and Enter any detail such as the order number etc., into the field marked ‘Reference Number’
Enter the supplier’s name irrespective of the fact that invoice is raised by the purchaser as this is self-invoicing under reverse charge.
Note that: According to the reverse charge mechanism under GST new list introduced the Priority Sector Lending Certificate by a GST registered person to another registered person shall now fall under Reverse charge via CGST Rate Notification.
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