Who are the persons liable to pay tax under reverse charge mechanism registered supplier?

Reverse Charge means the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply.

Can input tax credit be claimed reverse charge?

ITC on reverse charge Input tax credit can be claimed by the buyer as long as they use the goods and services they bought on reverse charge basis for business purposes only. Also, a supplier cannot claim ITC on the tax paid on goods/services that were used to make supplies that incur reverse charge.

What is the manner of payment of tax under reverse charge?

Reverse Charge Mechanism is the process of payment of GST by the receiver instead of the supplier. In this case, the liability of tax payment is transferred to the recipient/receiver instead of the supplier.

Why is RCM needed?

The registered buyer who has to pay GST under reverse charge has to do self-invoicing for the purchases made. In intra-state purchases, CGST and SGST have to be paid under reverse charge mechanism (RCM) by the purchaser. Also, in the case of inter-state purchases, the buyer has to pay the IGST.

Can we take credit of RCM in same month?

Yes, you can claim the Input Tax Credit on RCM in the same month, when you paid the GST under RCM.

When should RCM be paid?

In case of reverse charge, the time of supply shall be the earliest of the following dates: The date of payment. The date immediately after 60 days from the date of issue of invoice by the supplier.

What is the reason for reverse charge?

The domestic reverse charge is commonly used to prevent missing trader fraud i.e. the supplier will charge VAT, be paid the VAT and then ‘go missing’ before they declare it to HMRC.

Can RCM credit be taken in same month?