• Seth & Associates

Reverse Charge Mechanism in GST


In general GST is collected by the supplier from the recipient and remitted to the government. However, in order to plug tax evasion, in some cases taxes must be paid by the recipient directly to the Government instead of remitting to the supplier. Under section 2(98), it is called reverse charge. As per Sec 9(3) of CGST Act and Sec 5(3) of IGST Act, reverse charge shall be applicable in the following cases.


Please note we are only mentioning those below which are common to most businesses. There are few which are not commonly applicable and relate to Insurance Agent, Recovery agent, Cinema, Authors, RBI, DSA, Business Facilitators, Business Correspondents which are not mentioned in the table below.

OTHER IMPORTANT NOTES a. Tax under reverse charge can only be paid through electronic cash ledger only because ITC can only be used on outward supplies. b. Recipient can avail ITC for the tax paid under reverse charge if goods and services are used for business or furtherance of business. c. Person paying tax under composition scheme can not avail ITC for the tax paid under reverse charge mechanism. d. A person liable to pay tax under reverse charge has to compulsorily get registered irrespective of the threshold limit.

12 views0 comments

Recent Posts

See All

GST on Goods Transport Agency

WHO IS A GTA As per Section 65B (26) of the Finance Act, 1994; “Goods Transport Agency means any person who provides service in relation to transport of goods by road and issues consignment note, by w

© 2020 by Seth & Associates

New Delhi

C6 Basement, Shivalik, Malviya Nagar -110017

Lucknow (Head Office)

90, Pirpur Square, Narahi - 226001

Lucknow (Corporate Office)

Ground Floor, AI Apartments, Prag Narain Road - 226001


Coimbatore (Branch Office)

109 West Periaswamy road, 3B Shresht apartment, RS Puram, Coimbatore - 641002 

email -

Contact Us
Socialize With Us