- under sub-section (3) or sub-section (4) of section 9, or
- under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act.
Legal Provisions and Notifications
The concept of RCM under GST is not applicable under normal circumstances. It is only applicable under the circumstances which are specifically mentioned in Section 9(3) and Section 9(4) of the CGST Act and in Section 5(3) and Section 5(4) of the Integrated Goods and Services Tax Act , 2017 (‘IGST Act’).
Section 9(3) of the CGST Act and Section 5(3) of the IGST Act identify the specific goods or services notified by the Government under RCM. Whereas Section 9(4) of the CGST Act and Section 5(4) of the IGST Act, provides supply of goods or services by an unregistered supplier to registered recipient under RCM. Only these two types of categories are covered under RCM.
Specific goods or services notified by Government under RCM under Section 9(3) of the CGST Act and Section 5(3) of the IGST Act.
“The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.”
In regard to above, please note that the Government has notified the supply of goods under Section 9(3) of the CGST Act and Section 5(3) of the IGST Act vide Notification No. -04/2017-Central Tax (Rate) & Notification No.-04/2017-Integrated Tax (Rate) dated 28.06.2017. Please read these Notifications as amended from time to time. Under these notifications nine types of supply of goods are covered under RCM as under-
- Cashew nuts, not shelled or peeled;
- Bidi wrapper leaves (tendu);
- Tobacco leaves;
- Essential oils;
- Silk yarn;
- Raw cotton;
- Supply of lottery;
- Used vehicles, seized and confiscated goods, old and used goods, waste and scrap;
- Priority Sector Lending Certificate.
The supply of services under RCM has been notified vide Notification No- 13/2017 Central Tax (Rate) dated 28-06-2017 as amended from time to time under Section 9(3) of the CGST Act. The list of services covered under this notification is very wide. Further, two additional supply of services has been notified for RCM under section 5(3) of IGST Act vide Notification No- 10/2017 Integrated Tax (Rate) dated 28-06-2017 as under-
Sl. No.
Specific goods or services by an unregistered supplier to registered recipient under RCM under Section 9(4) of the CGST Act and Section 5(4) of the IGST Act.
The provision that has gathered maximum attention for its ability to create significant stress and nuisance would clearly be Section 9(4) of the CGST Act and Section 5(4) of IGST Act. Reverse Charge Section 9(4) of the CGST Act and Section 5(4) of IGST Act is also aimed to promote the organised business through GST registered person as registered dealer would prefer to purchase goods or services from registered dealers instead of un-registered dealers to avoid unnecessary difficulties as well. It is anticipated that the provision like RCM would discourage the business transactions from unregistered dealers and they would be forced to get themselves registered under GST voluntarily even though they are not compulsorily required to get themselves registered.
It is to be noted that existing provisions of RCM have been replaced by the CGST (Amendment) Act 2018 (‘Amendment Act’). Also, various notifications had come to give exemption regarding provision of RCM. But now the amended provisions of Section 9(4) of the CGST Act and 5(4) of IGST Act have been made effected w.e.f. 01/02/2019 and notified the specified persons and goods. Now, we would like to comprehend the old and new provisions of RCM in sequence (amended and notified day by day) to understand in better a position-
Erstwhile Section 9(4) of the CGST Act & Section 5(4) of the IGST Act –
[Before substituted by the Central Goods and Service Tax (Amendment) Act, 2018 and made effective vide Notification No. 02/2019-Central Tax dated 29-01-2019 from 01-02-2019]
“the central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.”
As per the above provision, whenever a registered person procures supplies from an unregistered supplier, he needs to pay GST on reverse charge basis. Please note that all the transactions of the supply of taxable goods or services or both from an unregistered person to registered person were covered under RCM basis without any limit.
A. Partial Exemption Notification No. 8/2017-Central Tax dated 28 th June 2017 applicable with effect from 1 st day of July, 2017.
There were lot of hue and cry over this provision during implementation phase itself and therefore, considering the inconvenience that may be caused to the stakeholders in the procedure under Section 9(4) of the CGST Act, 2017, the Central Government, in exercise of the powers conferred by sub-section (1) of section 11 of the CGST Act, had issued a Notification No. 8/2017-Central Tax dated 28 th June 2017 (‘First Notification’) applicable with effect from 1 st day of July, 2017.
By the said First Notification, the Central Government had exempts Intra-State supplies of goods or services or both received by a registered person from any unregistered person regarding applicability of the whole provisions of Section 9(4) of the CGST Act. The said First Notification was applicable w.e.f. 1 st day of July, 2017.
Please also note that the Central Government, by the proviso under the said First Notification, has also put one restriction on the said exemption by providing the limit of Rs. 5,000/- in day. Therefore, if the value of Intra-State supplies of goods or services or both is more than Rs. 5,000/- per day then RCM is applicable under Section 9(4) of the CGST Act.. Therefore, we can say that First Notification was a partial exemption notification.
As the exemption provided by the First Notification was a partial exemption, therefore, the Central Government decided to amend the said First Notification to give full exemption in case if Intra-State supplies of goods or services or both received by a registered person from any unregistered person.
It is also pertinent to note that there was no time limit in First Notification to obtain the exemption. Therefore, it was also decided by the Central Government to put the restriction for giving full exemption upto a certain time limit. In view of the above, the Central Government, in exercise of the powers conferred by sub-section (1) of section 11 of the CGST Act, 2017, had issued a Notification No. 38/2017-Central Tax, dated 13 th October, 2017 (‘Second Notification’) applicable with effect from 13/10/2017.
By the said Second Notification, the Central Government had deleted the proviso to First Notification, which restricts the exemption for RCM u/s 9(4) of the CGST Act only up to the limit of Rs. 5,000/- in day in case of the value of Intra-State supplies of goods or services or both.
By the said amendment, the partial exemption provided under the First Notification had been converted into full exemption. However, the time limit has been fixed for exemption under Second Notification (which was not earlier) mentioning that the exemption contained in the First Notification as amended by Second Notification, shall apply to all registered persons till the 31st day of March, 2018.
Pursuant to the above both Notifications i.e. First and Second Notification, exemption was available to all the registered persons till March 31, 2018 without any limit in case of supply procured from unregistered supplier. It is needles to mention that INTER-STATE SUPPLIES received from unregistered supplier is also exempt under corresponding Notification issued under IGST Act i.e. Notification No.32/2017-Integrated Tax (Rate) dated 13.10.2017.
Therefore, any registered person procuring taxable goods/services from unregistered suppliers, shall not be required to pay CGST under reverse charge mechanism U/s 9(4) of CGST Act, or 5(4) of IGST Act till March 31, 2018 with effect from 13th Oct, 2017.
Further, the above exemption was extended till 30 th June 2018 vide Notification No. 10/2018 – Central Tax (Rate) dated 23 rd March, 2018.
Again, the above exemption was extended till 30 th September 2018 vide Notification No. 12/2018 – Central Tax (Rate) dated 29 th June 2018.
With subsequent Notifications the timeline has been extended up to 30 th September 2019 vide Notification No. 22/2018-Central Tax (Rate) dated 6 th August, 2018.
CGST (Amendment) Act, 2018 dated 30.08.2018 for RCM.
The provisions of Section 9(4) of the CGST Act deals with the applicability of RCM, wherein, the goods or services or both is being procured by the registered person from the unregistered person.
Due to its wide implication, the said provisions have already undergone various amendments, however, the entire provisions of section 9(4) has been substituted by the CGST (Amendment) Act, 2018 vide published in Official Gazette on 29 th August 2018.
However, it is pertinent to note that the new provisions of Section 9(4) of the CGST Act were not notified till 29 th January 2019. But later on, the new provisions of Section 9(4) of CGST Act have been notified by the Notification No. 2/2019- Central Tax, dated 29 th January 2019 notifying the CGST (Amendment) Act, 2018 w.e.f. 01.02.2019.
In section 9 of the principal Act, for sub-section (4), the following sub-section shall be substituted, namely:––
“(4) The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both.”
By perusal of the said amended section, we can understand that the provisions of Section 9(4) of the CGST Act is not applicable to all registered persons, goods and services. It is applicable only to selected categories of registered persons & Goods and services which has to be notified by the Government. So, until the same is being notified, the provisions will not get effective.
It is also pertinent to mention that by the amendment in Section 9(4) through CGST (Amendment) Act, 2018 which has become effective w.e.f. 01.02.2019, the aforesaid Exemption Notification i.e. Notification No. 8/2017 stands rescinded w.e.f. 01.02.2019.
After a long gap, the Central Government has used its power provided under amended Section 9(4) of the CGST Act (Through CGST (Amendment) Act, 2018). In exercise of the powers conferred by Section 9(4) of the CGST Act, the Central Government notified the registered person and goods and/or services which shall be covered under RCM if received from unregistered suppliers. In this regard, the Central Government has issued a Notification No. 07/2019- Central Tax (Rate) dated 29 th March 2019 which has been effective from 01 April, 2019 and will be applicable on “Promoters” only for the ‘specified supplies.
SUMMARISED POSITION
Summarised position of Reverse Charge provisions on the basis of the above-mentioned respective notifications as amended time to time, are as under-
Relevant Notification
- 13.10.2017 to 31.03.2018- No Reverse Charge Mechanism is applicable u/s 9(4).
- 01.07.2017 to 12.10.2017- No Reverse Charge Mechanism upto Rs. 5000 per day
Notified registered person who shall pay tax on reverse charge basis on certain specified supplies of goods or services or both received from an unregistered supplier.
As mentioned above, in exercise of the powers conferred by Section 9(4) of the CGST Act, the Central Government notified the registered person and goods and/or services which shall be covered under RCM if received from unregistered suppliers. In this regard, the Central Government has issued a Notification No. 07/2019- Central Tax (Rate) dated 29 th March 2019 which has been effective from 01 April, 2019 and will be applicable on “Promoters” only for the ‘specified supplies.
Under the said Notification dated 29 th March, 2019, three kinds of supplies have been specified for which ‘promoter’ shall be liable to pay tax under reverse charge.
1. For Input and input Service for Construction of Project:
If ‘Promoter’ (Recipient) purchased input goods and services used in the construction of project from the unregistered person, the he is liable to pay GST under RCM on the supplies made from unregistered supplier under Section 9(4) of CGST Act. In respect of shortfall from the minimum value of goods or services or both required to be purchases for construction of project.
“Supply of such goods and services or both [other than services by way of grant of development rights, long term lease of land (against upfront payment in the form of premium, salami, development charges etc.) or FSI (including additional FSI)] which constitute the shortfall from the minimum value of goods or services or both required to be purchased by a promoter for construction of project, in a financial year (or part of the financial year till the date of issuance of completion certificate or first occupation, whichever is earlier) as prescribed in notification No. 11/ 2017- Central Tax (Rate), dated 28th June, 2017, at items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, published in Gazette of India vide G.S.R. No. 690, dated 28th June, 2017, as amended”
Also, the term used in the notification “shortfall from the minimum value of goods or services or both required to be purchased by a promoter” means, minimum *80% of input and input services or both required to be purchased from registered person and 20% can be purchase from unregistered person. Also, if this condition gets failed, promoted has to be pay RCM on the shortfall from 80% threshold.
Minimum value for the purpose is prescribed as 80% of the value of input & Input Services. However, value of input Services by way of grant of development rights, long term lease of land (against upfront payment in the form of premium, salami, development charges etc.) or FSI (including additional FSI) are excluded for calculating 80% procurement limit.
*The condition in Notification No. 3/2019-Central Tax (Rate) dated 29th March 2019 specifies that 80% of inputs and input services should be procured from registered person.
To understand: Suppose a promoter purchased 60% of input and input services used in the construction of project from registered supplier. Despite he also purchased 15% Cement & 25% other input & input services from unregistered person, during financial year 2022-23.
Promoter purchased input and input services used in the construction of project from registered supplier
*Please note that even if Promoter purchased input and input services used in the construction of project from registered supplier is 82% of total purchase, then promoter is still liable to pay on purchase of cement i.e. 15% under RCM (see Notification No. 24/2019-Central Tax (Rate) dated 30.09.2019)).
To more understand: Suppose a promoter purchased 60% of input and input services used in the construction of project from registered supplier. Despite he also purchased 15% Cement &12% other input & input services from unregistered person, during financial year 2022-23. He has also purchased input services on which tax is paid under reverse charge under Section 9(3) of the CGST Act.
Promoter purchased input and input services used in the construction of project from registered supplier.
*Please also note that inputs and input services on which tax is paid by promoter under reverse charge under Section 9(3) of CGST Act shall be deemed to have been procured from registered person.
Please also note that input & input services from composition dealer shall be considered as purchase from registered person paying taxes under composition scheme.
Please also note that the calculations of shortfalls are to be done financial year-wise. The excess % of purchased from registered suppliers in a financial year cannot be adjusted in a next financial year.
Caution:
Inward supplies of exempted goods/services shall be included in the value of supplies from unregistered persons while calculating threshold of 80% – FAQ (Part II- issued by CBI&C vide Circular F No. 354/32/2019-Tax Research Unit dated 14-5-2019)
Expenditure such as salaries, wages etc should not be considered in calculating the 80%threshold of input and input services because these are not supplies under GST Schedule III. [FAQ(II)-Real-estate-sector-1405]
GST Rate: The GST Rate is 18% even if the actual rate of GST in case of some of inputs or input services is lower than 18% – (Sr No. 452Q of Schedule III of Notification No. 08/2019-CT (R) dated 28-6-2017 as inserted w.e.f. 1-4-2019.)
2. For Purchase of Cement:
“Cement falling in chapter heading 2523 in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) which constitute the shortfall from the minimum value of goods or services or both required to be purchased by a promoter for construction of project, in a financial year (or part of the financial year till the date of issuance of completion certificate or first occupation, whichever is earlier) as prescribed in notification No. 11/ 2017- Central Tax (Rate), dated 28th June, 2017, at items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, published in Gazette of India vide G.S.R. No. 690, dated 28th June, 2017, as amended”
“Cement falling in chapter heading 2523 in the first schedule to the Customs Tariff Act, 1975 (51 of 1975).”
In simple terms: As per Notification No. 24/2019-Central Tax (Rate) dated 30 September, 2019, RCM will be applicable on any amount of purchase of ‘Cement’ by the “promoter” from an unregistered supplier for the construction of project during the financial year, irrespective of the condition of 20/80%, as in case of input goods and services at point 1 above i.e. on any purchase from unregistered person, RCM is applicable. At present GST Rate of Tax for cement is 28%. This tax will be paid under RCM in the same month of purchase.
After considering payment of GST on cement under reverse charge (if any), at least 80% of the procurement of inputs and input services used in supplying the real estate project service shall be received from registered supplier only. In case requirement of procurement of 80% from registered suppliers is not achieved, and there is a shortfall in procurement from registered supplier, GST @18% is payable on value to the extent of shortfall.
3. For Purchase Capital goods:
“Capital goods falling under any chapter in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) supplied to a promoter for construction of a project on which tax is payable or paid at the rate prescribed for items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, in notification No. 11/ 2017- Central Tax (Rate), dated 28th June, 2017, published in Gazette of India vide G.S.R. No. 690, dated 28th June, 2017, as amended.”
Notification No. 07/2019- Central Tax (Rate), “promoter” is liable to pay GST under RCM for purchase of any capital goods from any unregistered supplier for construction of project during the financial year.
To understand: Suppose a promoter purchased 82% of input and input services used in the construction of project from registered supplier. Despite he also purchased 05% Cement & 03% other input & input services from unregistered person, during financial year 2022-23. He has also purchased 10% capital goods from unregistered person during financial year 2022-23.
Promoter purchased input and input services used in the construction of project from registered supplier.
[ Liable to pay under RCM on shortfall 80% – (82% + 05% +10%)]
(i) the term “promoter” shall have the same meaning as assigned to it in clause (zk) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);
(ii) “project” shall mean a Real Estate Project (REP) or a Residential Real Estate Project (RREP);
(iii) the term “Real Estate Project (REP)” shall have the same meaning as assigned to it in in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);
(iv) “Residential Real Estate Project (RREP)” shall mean a REP in which the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the REP.
(v) the term “floor space index (FSI)” shall mean the ratio of a building’s total floor area (gross floor area) to the size of the piece of land upon which it is built.
CGST (RATE) NOTIFICATION
Reverse Charge on certain specified supplies of goods
In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby specifies the supply of goods, the description of which is specified in column (3), of the Table below an falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Table, made by the person as specified in the corresponding entry in column (4), in respect of which the central tax shall be paid on reverse charge basis by the recipient of the intra-state supply of such goods as specified in the corresponding entry in column (5) and all the provisions of the said Act shall apply to such recipient, namely:-
TABLE
| S. No. | Tariff item, sub-heading heading or Chapter | Description of supply of Goods | Supplier of goods | Recipient of supply |
| (1) | (2) | (3) | (4) | (5) |
| 1. | 0801 | Cashew nuts, not shelled or peeled | Agriculturist | Any registered person |
| 2. | 1401 90 10 | Bidi wrapper leaves (tendu) | Agriculturist | Any registered person |
| 3. | 2401 | Tobacco leaves | Agriculturist | Any registered person |
| 1 [3A | 33012400, |
(a) of peppermint (Menthapiperita);
(1) in this Table, “tariff item”, “sub-heading”, “heading” and “Chapter” shall mean respectively a tariff item, sub-heading, heading or chapter, as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).
(2) The rules for the interpretation of the First Schedule to the said Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification.
2. This notification shall come into force with effect from the 1 st day of July 2017.
IGST (RATE) NOTIFICATION
Reverse Charge on certain specified supplies of goods
In exercise of the power conferred by sub-section (3) of section 5 of the Integrated Goods and Services Tax Act, 2017 (13of 2017), the Central Government, on the recommendation of thee Council, hereby specifies the supply of goods, the description of which is specified in column (3), of the Table below an falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Table, made by the person as specified in the corresponding entry in column (4), in respect of which the integrated tax shall be paid on reverse charge basis by the recipient of the 1 [inter-State] supply of such goods as specified in the corresponding entry in column (5) and all the provisions of the said Act shall apply to such recipient, namely:-
TABLE
| S. No. | Tariff item, sub-heading heading or Chapter | Description of supply of Goods | Supplier of goods | Recipient of supply |
| (1) | (2) | (3) | (4) | (5) |
| 1. | 0801 | Cashew nuts, not shelled or peeled | Agriculturist | Any registered person |
| 2. | 1401 90 10 | Bidi wrapper leaves (tendu) | Agriculturist | Any registered person |
| 3. | 2401 | Tobacco leaves | Agriculturist | Any registered person |
| 2 [3A | 33012400, |
(c) of peppermint (Menthapiperita);
(1) in this Table, “tariff item”, “sub-heading”, “heading” and “Chapter” shall mean respectively a tariff item, sub-heading, heading or chapter, as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).
(2) The rules for the interpretation of the First Schedule to the said Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification.
2. This notification shall come into force with effect from the 1 st day of July 2017.
1. Substituted for “intra-State” by corrigendum GST 757(E), dated 30.06.2017.
CGST (RATE) NOTIFICATION
Reverse Charge on certain specified supplies of services.
In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council hereby notifies that on categories of supply of services mentioned in column (2) of the Table below, supplied by a person as specified in column (3) of the said Table, the whole of central tax leviable under section 9 of the said Central Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services as specified in column (4) of the said Table:-
TABLE
| Sl. No. | Category of Supply of Services | Supplier of service | Recipient of Services |
| (1) | (2) | (3) | (4) |
| 1 | Supply of Services by a goods transport agency (GTA) 1 [, 2 [***]] in respect of transportation of goods by road to- |
(a) any factory registered under or governed by the Factories Act, 1948(63 of 1948);or
(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or
(c) any co-operative society established by or under any law; or
(d) any person registered under the
Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including association of persons; or
(g) any casual taxable person.
3 [Provided that nothing contained in this entry shall apply to services provided by a goods transport agency, by way of transport of goods in a goods carriage by road, to, –
(a) a Department or Establishment of the Central Government or State Government or Union territory; or
(b) local authority; or
(c) Governmental agencies,
which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services.]
4 [Provided further that nothing contained in this entry shall apply where,-
(i) the supplier has taken registration under CGST Act, 2017 and exercised the option to pay tax on the services of GTA in relation to transport of goods supplied by him under forward charge; and
(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or
(c) any co-operative society established by or under any law; or
(d) any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including association of persons; or
(g) any casual taxable person;
(1) renting of immovable property, and
(2) services specified below-
(i) services by the Department of Posts 6 [***];
(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
Provided that nothing contained in this entry shall apply where, – (i) the author has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017), and filed a declaration, in the form at Annexure I, within the time limit prescribed therein, with the jurisdictional CGST or SGST Commissioner, as the case may be, that he exercises the option to pay central tax on the service specified in column (2), under forward charge in accordance with Section 9 (1) of the Central Goods and Service Tax Act, 2017 under forward charge, and to comply with all the provisions of Central Goods and Service Tax Act, 2017 (12 of 2017) as they apply to a person liable for paying the tax in relation to the supply of any goods or services or both and that he shall not withdraw the said option within a period of 1 year from the date of exercising such option;
Provided that nothing contained in this entry shall apply to, –
(i)(a) a Department or Establishment of the Central Government or State Government or Union territory; or
(b) local authority; or
(c) Governmental agencies; which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under section 51 of the said Act and not for making a taxable supply of goods or services; or
Explanation– for the purpose of this notification,-
(a) The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification.
(b) “Body Corporate” has the same meaning as assigned to it in clause (11) of section 2 of the Companies Act, 2013;
(c) the business entity located in the taxable territory who is litigant, applicant or petitioner, as the case may be, shall be treated as the person who receives the legal services for the purpose of this notification;
(d) the words and expressions used and not defined in this notification but defined in the Central Goods and Services Tax Act, the Integrated Goods and Services Tax Act, and the Union Territory Goods and Services Tax Act shall have the same meanings as assigned to them in those Acts;
1 [(e) a “Limited Liability Partnership” formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (6 of 2009) shall also be considered as a partnership firm or a firm.]
7 [(f) “insurance agent” shall have the same meaning as assigned to it in clause (10) of section 2 of the Insurance Act, 1938 (4 of 1938);]
12 [ (g) “renting of immovable property” means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property;]
3 [ (h) provisions of this notification, in so far as they apply to the Central Government and State Governments, shall also apply to the Parliament and State Legislatures;]
8 [(i) The term “apartment” shall have the same meaning as assigned to it in clause (e) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016).
(j) the term “promoter” shall have the same meaning as assigned to it in clause (zk) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016).
(k) the term “project” shall mean a Real Estate Project (REP) or a Residential Real Estate Project (RREP);
(l) “the term “Real Estate Project (REP)” shall have the same meaning as assigned to it in in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);
(m) The term “Residential Real Estate Project (RREP)” shall mean a REP in which the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the REP;
(n) “floor space index (FSI)” shall mean the ratio of a building’s total floor area (gross floor area) to the size of the piece of land upon which it is built.]
2. This notification shall come into force on the 1 st day of July, 2017.
10 [Annexure I
FORM
(Declaration to be filed by an author for exercising the option to pay tax on the “supply of services by an author by way of 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 works to a publisher” under forward charge on or before 31.10.2019 for the option to be effective from 1.11.2019 or before the commencement of any Financial Year for the option to be effective from the commencement of that Financial Year.)
Reference No. ___________________
(To be addressed to the jurisdictional Commissioner)
1. Name of the author:
2. Address of the author:
3. GSTIN of the author:
Declaration
1. I have taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017), and I hereby exercise the option to pay central tax on the service specified against serial No. 9A in column (2) of the Table in the notification No. 13/2017 – Central Tax (Rate), dated the 28th June, 2017, supplied by me, under forward charge in accordance with section 9 (1) of CGST Act, and to comply with all the provisions of CGST Act, 2017 (12 of 2017) as they apply to a person liable for paying the tax in relation to the supply of any goods or services or both;
2. I understand that this option, once exercised, shall not be allowed to be changed within a period of 1 year from the date of exercising the option and shall be valid, at least, till the end of Financial Year following the year in which it is made.
Annexure II
(Declaration to be made in the invoice by the author exercising the option to pay tax on the “supply of service by an author by way of 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 works to a publisher” under forward charge.)
Declaration
(9A of Table)
I have exercised the option to pay central tax on the service specified against serial No. 9A in column (2) of the Table in the notification No. 13/2017 – Central Tax (Rate), dated the 28th June, 2017 under forward charge.]
4 [Annexure III
Declaration
I/we have taken registration under the CGST Act, 2017 and have exercised the option to pay tax on services of GTA in relation to transport of goods supplied by us during the Financial Year _____ under forward charge.]
5. As corrected by Corrigendum GSR 1199(E), dated 25.09.2017.
6. Word “by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central Government, State Government or Union territory or local authority” omitted by Notification No. 5/2022-Central Tax (Rate), dated 13.07.2022, we.f. 18.07.2022.
9. Substituted by Notification No. 22/2019-Central Tax (Rate), dated 30.09.2019, w.e.f. 1.10.2019. Prior to its substitution, Sl No. 9 read as under:
| 9 | Supply of services by an author, music composer, photographer, artist or the like by way of 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 to a publisher, music company, producer or the like. | Author or music composer, photographer, artist, or the like | Publisher, music company, producer or the like, located in the taxable territory. |
13. Substituted by Notification No. 29/2019-Central Tax (Rate), dated 31.12.2019, w.e.f. 31.12.2019. Prior to its substitution, Sl No. 15 read as under:
| 15 | Services provided by way of renting of a motor vehicle provided to a body corporate. | Any person other than a body corporate, paying central tax at the rate of 2.5% on renting of motor vehicles with input tax credit only of input service in the same line of business | Any body corporate located in the taxable territory. |
IGST (RATE) NOTIFICATION
Reverse Charge on certain specified supplies of services.
In exercise of the powers conferred by sub-section (3) of section 5 of the Integrated Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council hereby notifies that on categories of supply of services mentioned in column (2) of the Table below, supplied by a person as specified in column (3) of the said Table, the whole of integrated tax leviable under section 5 of the said Integrated Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services as specified in column (4) of the said Table:-
TABLE
| Sl. No. | Category of Supply of Services | Supplier of service | Recipient of Services |
| (1) | (2) | (3) | (4) |
| 1 | Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient. | Any person located in a non-taxable territory | Any person located in the taxable territory other than non-taxable online recipient. |
| 2 | Supply of Services by a goods transport agency (GTA) 1 [, 2 [***]] in respect of transportation of goods by road to- |
(a) any factory registered under or governed by the Factories Act, 1948(63 of 1948);or
(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or
(c) any co-operative society established by or under any law; or
(d) any person registered under the
Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including association of persons; or
(g) any casual taxable person.
3 [Provided that nothing contained in this entry shall apply to services provided by a goods transport agency, by way of transport of goods in a goods carriage by road, to, –
(a) a Department or Establishment of the Central Government or State Government or Union territory; or
(b) local authority; or
(c) Governmental agencies,
which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services.]
4 [Provided further that nothing contained in this entry shall apply where,-
(i) the supplier has taken registration under CGST Act, 2017 read with clause (v) of section 20 of the IGST Act, 2017 and exercised the option to pay tax on the services of GTA in relation to transport of goods supplied by him under forward charge; and
(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or
(c) any co-operative society established by or under any law; or
(d) any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including association of persons; or
(g) any casual taxable person;
(1) renting of immovable property, and
(2) services specified below-
(i) services by the Department of Posts 6 [***];
(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
Provided that nothing contained in this entry shall apply where, –
(i) the author has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017), and filed a declaration, in the form at Annexure I, within the time limit prescribed therein, with the jurisdictional CGST or SGST Commissioner, as the case may be, that he exercises the option to pay integrated tax on the service specified in column (2), under forward charge in accordance with Section 5 (1) of the Integrated Goods and Service Tax Act, 2017 under forward charge, and to comply with all the provisions of Integrated Goods and Service Tax Act, 2017 (13 of 2017) as they apply to a person liable for paying the tax in relation to the supply of any goods or services or both and that he shall not withdraw the said option within a period of 1 year from the date of exercising such option;
Provided that nothing contained in this entry shall apply to, –
(i)(a) a Department or Establishment of the Central Government or State Government or Union territory; or
(b) local authority; or
(c) Governmental agencies;
which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under section 51 of the said Act and not for making a taxable supply of goods or services; or
Explanation– for the purpose of this notification,-
(a)The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification.
(b) “Body Corporate” has the same meaning as assigned to it in clause (11) of section 2 of the Companies Act, 2013;
(c) the business entity located in the taxable territory who is litigant, applicant or petitioner, as the case may be, shall be treated as the person who receives the legal services for the purpose of this notification;
(d) the words and expressions used and not defined in this notification but defined in the Central Goods and Services Tax Act, the Integrated Goods and Services Tax Act, and the Union Territory Goods and Services Tax Act shall have the same meanings as assigned to them in those Acts;
1 [(e) a “Limited Liability Partnership” formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (6 of 2009) shall also be considered as a partnership firm or a firm.]
7 [(f) “insurance agent” shall have the same meaning as assigned to it in clause (10) of section 2 of the Insurance Act, 1938 (4 of 1938);]
12 [(g) “renting of immovable property” means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property;]
3 [(h) provisions of this notification, in so far as they apply to the Central Government and State Governments, shall also apply to the Parliament and State Legislatures;]
8 [(i) The term “apartment” shall have the same meaning as assigned to it in clause (e) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);
(j) the term “promoter” shall have the same meaning as assigned to it in clause (zk) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);
(k) the term “project” shall mean a Real Estate Project (REP) or a Residential Real Estate Project (RREP);
(l) “the term “Real Estate Project (REP)” shall have the same meaning as assigned to it in in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);
(m) The term “Residential Real Estate Project (RREP)” shall mean a REP in which the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the REP;
(n) “floor space index (FSI)” shall mean the ratio of a building’s total floor area (gross floor area) to the size of the piece of land upon which it is built.]
2. This notification shall come into force on the 1 st day of July, 2017.
10 [Annexure I
FORM
(Declaration to be filed by an author for exercising the option to pay tax on the “supply of services by an author by way of 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 works to a publisher” under forward charge on or before 31.10.2019 for the option to be effective from 1.11.2019 or before the commencement of any Financial Year for the option to be effective from the commencement of that Financial Year.)
Reference No. ___________________
(To be addressed to the jurisdictional Commissioner)
1. Name of the author:
2. Address of the author:
3. GSTIN of the author:
Declaration
3. I have taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017), and I hereby exercise the option to pay integrated tax on the service specified against serial No. 11A in column (2) of the Table in the notification No. 10/2017 – Integrated Tax (Rate), dated the 28th June, 2017, supplied by me, under forward charge in accordance with section 5(1) of IGST Act, and to comply with all the provisions of IGST Act, 2017 (13 of 2017) as they apply to a person liable for paying the tax in relation to the supply of any goods or services or both;
4. I understand that this option, once exercised, shall not be allowed to be changed within a period of 1 year from the date of exercising the option and shall be valid, at least, till the end of Financial Year following the year in which it is made.
Annexure II
(Declaration to be made in the invoice by the author exercising the option to pay tax on the “supply of service by an author by way of 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 works to a publisher” under forward charge.)
Declaration
(11A of Table)
I have exercised the option to pay integrated tax on the service specified against serial No. 11A in column (2) of the Table in the notification No. 10/2017 – Integrated Tax (Rate), dated the 28th June, 2017 under forward charge.]
4 [Annexure III
Declaration
I/we have taken registration under the CGST Act, 2017 read with clause (v) of section 20 of IGST Act, 2017 and have exercised the option to pay tax on services of GTA in relation to transport of goods supplied by us during the Financial Year _____ under forward charge.]
2. Words “who has not paid integrated tax at the rate of 12%,” omitted by Notification No. 5/2022- Integrated (Rate), dated 13.07.2022, w.e.f. 18.07.2022.
5. As corrected by Corrigendum GSR 1200(E), dated 25.09.2017.
6. Word “by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central Government, State Government or Union territory or local authority” omitted by Notification No. 5/2022-Integrated Tax (Rate), dated 13.07.2022, we.f. 18.07.2022.
9. Substituted by Notification No. 21/2019-Integreted Tax (Rate), dated 30.09.2019, w.e.f. 1.10.2019. Prior to its substitution, Sl No. 11 read as under:
| 11 | Supply of services by an author, music composer, photographer, artist or the like by way of 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 to a publisher, music company, producer or the like. | Author or music composer, photographer, artist, or the like | Publisher, music company, producer or the like, located in the taxable territory. |
13. Substituted by Notification No. 28/2019-Integrated Tax (Rate), dated 31.12.2019, w.e.f. 31.12.2019. Prior to its substitution, Sl No. 17 read as under:
| 17 | Services provided by way of renting of a motor vehicle provided to a body corporate. | Any person other than a body corporate, paying integrated tax at the rate of 5% on renting of motor vehicles with input tax credit only of input service in the same line of business | Any body corporate located in the taxable territory. |
CGST (RATE) NOTIFICATION
Notified registered person who shall pay tax on reverse charge basis on certain specified supplies of goods or services or both received from an unregistered supplier.
In exercise of the powers conferred by sub-section (4) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby notifies that the registered person specified in column (3) of the table below, shall in respect of supply of goods or services or both specified in column (2) of the Table below, received from an unregistered supplier shall pay tax on reverse charge basis as recipient of such goods or services or both, namely:-
| Sl. No. | Category of supply of goods and services | Recipient of goods and services |
| (1) | (2) | (3) |
| 1 | Supply of such goods and services or both [other than services by way of grant of development rights, long term lease of land (against upfront payment in the form of premium, salami, development charges etc.) or FSI (including additional FSI)] which constitute the shortfall from the minimum value of goods or services or both required to be purchased by a promoter for construction of project, in a financial year (or part of the financial year till the date of issuance of completion certificate or first occupation, whichever is earlier) as prescribed in notification No. 11/ 2017- Central Tax (Rate), dated 28th June, 2017, at items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, published in Gazette of India vide G.S.R. No. 690, dated 28th June, 2017, as amended. | Promoter. |
| 2 | 1 [Cement falling in chapter heading 2523 in the first schedule to the Customs Tariff Act, 1975 (51 of 1975).] | Promoter. |
| 3 | Capital goods falling under any chapter in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) supplied to a promoter for construction of a project on which tax is payable or paid at the rate prescribed for items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, in notification No. 11/ 2017- Central Tax (Rate), dated 28th June, 2017, published in Gazette of India vide G.S.R. No. 690, dated 28th June, 2017, as amended. | Promoter. |
Explanation– for the purpose of this notification-
(i) the term “promoter” shall have the same meaning as assigned to it in in clause (zk) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);
(ii) “project” shall mean a Real Estate Project (REP) or a Residential Real Estate Project (RREP);
(iii) the term “Real Estate Project (REP)” shall have the same meaning as assigned to it in in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);
(iv) “Residential Real Estate Project (RREP)” shall mean a REP in which the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the REP.
(v) the term “floor space index (FSI)” shall mean the ratio of a building’s total floor area (gross floor area) to the size of the piece of land upon which it is built.
2. This notification shall come into force with effect from the 1st of April, 2019.
1. Substituted for “Cement falling in chapter heading 2523 in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) which constitute the shortfall from the minimum value of goods or services or both required to be purchased by a promoter for construction of project, in a financial year (or part of the financial year till the date of issuance of completion certificate or first occupation, whichever is earlier) as prescribed in notification No. 11/ 2017- Central Tax (Rate), dated 28th June, 2017, at items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, published in Gazette of India vide G.S.R. No. 690, dated 28th June, 2017, as amended” by Notification No. 24/2019-Central Tax (Rate), dated 30.09.2019, w.e.f. 1.10.2019.
IGST (RATE) NOTIFICATION
Notified registered person who shall pay tax on reverse charge basis on certain specified supplies of goods or services or both received from an unregistered supplier.
In exercise of the powers conferred by sub-section (4) of section 5 of the Integrated Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby notifies that the registered person specified in column (3) of the table below, shall in respect of supply of goods or services or both specified in column (2) of the Table below, received from an unregistered supplier shall pay tax on reverse charge basis as recipient of such goods or services or both, namely:-
| Sl. No. | Category of supply of goods and services | Recipient of goods and services |
| (1) | (2) | (3) |
| 1 | Supply of such goods and services or both [other than services by way of grant of development rights, long term lease of land (against upfront payment in the form of premium, salami, development charges etc.) or FSI (including additional FSI)] which constitute the shortfall from the minimum value of goods or services or both required to be purchased by a promoter for construction of project, in a financial year (or part of the financial year till the date of issuance of completion certificate or first occupation, whichever is earlier) as prescribed in notification No. 8/ 2017- Integrated Tax (Rate), dated 28th June, 2017, at items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, published in Gazette of India vide G.S.R. No. 683(E), dated 28th June, 2017, as amended. | Promoter. |
| 2 | 1 [Cement falling in chapter heading 2523 in the first schedule to the Customs Tariff Act, 1975 (51 of 1975).] | Promoter. |
| 3 | Capital goods falling under any chapter in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) supplied to a promoter for construction of a project on which tax is payable or paid at the rate prescribed for items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, in notification No. 8/ 2017- Integrated Tax (Rate), dated 28th June, 2017, published in Gazette of India vide G.S.R. No. 683, dated 28th June, 2017, as amended. | Promoter. |
Explanation– for the purpose of this notification-
(vi) the term “promoter” shall have the same meaning as assigned to it in in clause (zk) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);
(vii) “project” shall mean a Real Estate Project (REP) or a Residential Real Estate Project (RREP);
(viii) the term “Real Estate Project (REP)” shall have the same meaning as assigned to it in in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);
(ix) “Residential Real Estate Project (RREP)” shall mean a REP in which the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the REP.
(x) the term “floor space index (FSI)” shall mean the ratio of a building’s total floor area (gross floor area) to the size of the piece of land upon which it is built.
2. This notification shall come into force with effect from the 1st of April, 2019.
2. Substituted for “Cement falling in chapter heading 2523 in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) which constitute the shortfall from the minimum value of goods or services or both required to be purchased by a promoter for construction of project, in a financial year (or part of the financial year till the date of issuance of completion certificate or first occupation, whichever is earlier) as prescribed in notification No. 8/ 2017- Integrated Tax (Rate), dated 28th June, 2017, at items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, published in Gazette of India vide G.S.R. No. 683(E), dated 28th June, 2017, as amended” by Notification No. 23/2019-Integrated Tax (Rate), Dated 30.09.2019, w.e.f. 1.10.2019.
Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the author whatsoever and the content is to be used strictly for informational and educational purposes. While due care has been taken in preparing this article, certain mistakes and omissions may creep in. the author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.
