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Reverse Charge in GST – When To Pay?

Generally, it is the suppliers who needs to pay the taxes of supply. However, in some cases the receiver also requires paying the taxes on what he receives and therefore the chargeability gets reversed. There are usually three conditions under which the reverse charge is applicable. Let us understand each scenario separately.

GST Reverse Charge

GST Reverse Charge

Different Scenarios

Scenario 1 – Reverse Charge occurs when Supply is done from an Unregistered dealer to the Registered Dealer. In case the person who is not registered under GST supplies goods to the person who is registered, latter will have to pay the GST. The GST should be paid directly by the receiver to the Government instead of the supplier. One who is paying the reverse charge for receiving the goods will have to do self-invoicing for the purchase made. For the inter state purchases made, the buyer needs to pay IGST. Similarly, for the intra-state purchased CGST and SGST should be paid under RCM by the purchaser.

Scenario 2 – Reverse Charge would be applicable to the e-commerce operator in case the e-commerce operator supplies services. Take of instance if a company offering various services of teachers, beauticians, mechanics and so on is offering the services to the customers, then the GST would be collected from the customers rather than from the registered service providers. In case the e-commerce operator does not have any offline presence in the taxable territory then an individual who is representing the entity would be liable to pay the tax. In case of no representative, it is the duty of the operator to appoint a representative who would be liable to pay GST.

Scenario 3 – Reverse Charge is available on supply of certain goods and services as specified by CBEC. There is a list of such goods and services on which the reverse charge is applicable.

All these cases ask for the Self Invoicing from the buyer. Self Invoicing should be done when someone has purchased from an unregistered supplier and the Goods and services purchased fall under the reverse charge. Self Invoice should be prepared because in such case the supplier cannot issue the GST compliant invoice to the receiver.

Time of Supply

  • In case of goods – In such case, the time of supply should be the earliest of the following dates:-
  1. The date of receipt of the good
  2. Date of payment
  3. Date immediately after 30 days from the date of issue of an invoice by the supplier
  • In case of Services
  1. Date of Payment
  2. Date immediately after 60 days from the date of issue of invoice by the supplier
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