The GST Council has decided the services under reverse charge on 19 May 2017 during the 14th GST Council meeting. “Reverse charge’’ means the liability to pay tax by the recipient of supply of goods or services instead of the supplier of such goods or services. Reverse charge mechanism has been introduced both for Goods and Services. The GST Council has broadly approved the GST rates for services at Nil, 5%, 12%, 18% and 28%.

Time of supply for Goods under reverse charge

In case of reverse charge, the time of supply shall be the earliest of the following dates—
(a) the date of receipt of goods OR
(b) the date of payment OR
(c) the date immediately after THIRTY days from the date of issue of invoice by the supplier (60 days for services)

If it is not possible to determine the time of supply under (a), (b) or (c), the time of supply shall be the date of entry in the books of account of the recipient.

For clause (b)- the date of payment shall be earlier of-
1. The date on which the recipient entered the payment in his books 
     OR 
2. The date on which the payment is debited from his bank account

 

Time of supply for Services under reverse charge

In case of reverse charge, the time of supply shall be the earliest of the following dates—
(a) The date of payment
         OR
(b) The date immediately after SIXTY days from the date of issue of invoice by the supplier (30 days for goods)

If it is not possible to determine the time of supply under (a) or (b), the time of supply shall be the date of entry in the books of account of the receiver of service.

For clause (a)- the date of payment shall be earlier of-
1. The date on which the recipient entered the payment in his books 
          OR 
2. The date on which the payment is debited from his bank account

When supplier is located outside India

In case of ‘associated enterprises’, where the supplier of service is located outside India, the time of supply shall be-

  1. the date of entry in the books of account of the receiver OR
  2. the date of payment

-whichever is earlier.

 

The list of services that will be under reverse charge as approved by the GST Council is given below:

SERVICES:

  • Taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory other than non-assessee online recipient (OIDAR)
  • Services provided or agreed to be provided by a goods transport agency (GTA) in respect of transportation of goods by road
  • Services provided or agreed to be provided by an individual advocate or firm of advocates by way of legal services, directly or indirectly
  • Services provided or agreed to be provided by an arbitral tribunal
  • Sponsorship services
  • Services provided or agreed to be provided by Government or local authority excluding,- (1) renting of immovable property, and (2) services specified below-
  • 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 Government;
  • services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
  • transport of goods or passengers.
  • Services provided or agreed to be provided by a director of a company or a body corporate to the said company or the body corporate
  • Services provided or agreed to be provided by an insurance agent to any person carrying on insurance business
  • Services provided or agreed to be provided by a recovery agent to a banking company or a financial institution or a non-banking financial company
  • Services by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India
  • Transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works
  • Radio taxi or Passenger Transport Services provided through electronic commerce operator.

                    The percentages of GST Rates payable by the service providers under these services are NIL and that of recipient of these services are 100%.

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