You most definitely must have heard about the concept of GST and surely you have even paid an amount for it. This system of indirect taxation has gone through various trains of amendments right from its inception. However, there are several factors like the depth and complexity of GST which make it hard to comprehend. RCM (Reverse Changed Mechanism) is among the key factors under GST tax that you must be aware of. Hence, in this blog, you’ll get detailed information about it.
Reverse Charge Mechanism Under GST:
Usually, you pay GST if you are the supplier of services and goods. In Reverse Charge Mechanism, you as a receiver have to make a payment of the taxes. That is, the liability of the tax is reversed. In the normal procedure of GST, the supplier sells the services and goods in the hand of the receiver and the receiver pays the supplier for it. However, in the case of the Reverse Charge Mechanism under GST, it is paid directly from the receiver to the government. The step of passing through the supplier is omitted in this process.
Reverse Charge Mechanism – The Accurate Supplying Time:
There are various factors under RCM that are mandatory to keep in mind regarding the goods and services. Those factors are:
- Supplying Time for Goods – Against goods, the supplying time for the reverse charge has to be earlier for the below-mentioned dates:
- Payment date
- Receipt date of goods
- From the issuing date on your supplier invoice till the date of the 30th day
- Supplying Time for Service – Against services, the supplying time for the reverse charge has to be earlier for the following dates:
- Payment date
- From the issuing date on your supplier invoice till the date of the 60th day
Some Exceptional Cases of RCM:
There are exceptional cases of RCM under GST in case of both supplying time of the goods and supplying time for services. Those cases are:
- Supplying Time for Goods – In case the date of supply for goods becomes hard to determine then the supply time will become the entry date as mentioned in the recipient’s books.
- Supplying Time for Service – In case the supplying date of the service becomes hard to determine when the supplying time will become the date of entry as mentioned in the recipient’s books.
Conditions for RCM Application:
Some situations in which you can apply for RCM are as follows:
- Supply to the dealer who has been enrolled from the dealer who hasn’t been registered.
- Ecommerce services
- Specific goods supply
Reverse Charge Mechanism one of the various branches under GST. As a consumer, you’ve to understand the importance of it since you’ve to constantly deal with it and so that you can make informed decisions. You can get all updates regarding GST at Finserv MARKETS. If you’re looking for funding for your business, you can avail of the Business Loan at Finserv MARKETS. Finserv MARKETS’ Business Loan comes at an easy application procedure, flexible repayment, and attractive interest rates.