Has Reverse Charge in GST Really Gone?
Since the historic indirect tax reform has been launched in India, the Goods and Services Tax, or GST, as so it is called, has become the talk of the town. Every other day, there is some new announcement, some new problem or issue arises, people start complaining, and the government rushes in for damage control.
Even as the people were beginning to understand the system, and come into terms with the complicated reverse charge mechanism, the government announced that the reverse charge provision is going to be stopped.
The original notification that effected it can be downloaded here.
The real deal
There are two types of reverse charge in GST.
- Reverse Charge on Purchase of Taxable goods and services by registered person from unregistered person.
- Compulsory reverse charge on purchase of specific goods or services.
Only the first one has been abolished. And that too only till 31.03.2018!
So the second one is still there?
Yes. For example, if you are a registered person taking transport services from a Goods transport Agency (GTA), and you are also paying the freight, then are still liable to pay GST @5% on that freight amount on reverse charge basis. (You can claim input tax credit after paying the GST amount)
And GTA freight payments are a very common business transaction, even for small businesses.
So we see that the government has only given a half, limited period relief, if we can say so, with respect to reverse charge.
