CA/CS/CMA Intermediate Goods & Services Tax Notes by CA Yogesh Verma

Chapter 5 Reverse Charge Mechanism

3 things to be considered - Service Provider, Service Receiver and Type of Service

Cases where service receiver needs to pay GST to government are covered under reverse charge
mechanism:

1) Supply from Non Taxable territory to taxable territory – IGST 18%, No reverse charge on
OIDAR service received by unregistered person.

2) Goods Transport Agency – to person (factory, society, co-operative society, registered

person under GST, body corporate, firm, AOP, casual taxable person) located in taxable
territory and liable to pay freight.
If GTA charges GST under forward charge mechanism then GST @ 12%
If GTA is unregistered or doesn’t charge GST then recipient liable to GST @ 5% except
below

3) Advocate providing representational services (before any court, tribunal, and authority) to
any business entity located in taxable territory.
4) Arbitral tribunal providing services to business entity located in taxable territory
5) Sponsorship services – Supplied by any person to body corporate/firm located in taxable
territory - @ 18%
6) Letting of immovable property by govt. or transport of goods/passengers by government
or services by department of posts (speed post, express parcel, life insurance, agency
services provided to a person other than CG/SG/UT/LA) – These services provided to a
business entity - 18% rate of GST
7) Services of director – to body corporate located in taxable territory
8) Insurance agents providing service to a person who is carrying on insurance business
located in taxable territory.
9) Recovery agents – providing services to banking company, financial institution, NBFC
located in taxable territory
10) Author or music composer, photographer, artist providing service (permitting use of
copyright material) to publisher, Music Company, producer located in taxable territory GST
12%.
11) Transport of goods by vessel from a place outside India up to custom station in India – IGST
5%
12) Services received by RBI from members of overseeing committee
13) Services by an individual Direct Selling Agent (DSAs) providing service to banking co, NBFC
located in taxable territory.
14) Unregistered person supplying (notified categories of intra state supplies) to class of
notified registered person – persons & supplies to be notified

Page | 36
© yogeshvermaclasses | www.Learnzup.com | Whatsapp 8368479717 | Join Free Study Groups on Learnzup
 CA/CS/CMA Intermediate Goods & Services Tax Notes by CA Yogesh Verma

15) Electronic commerce operator (ECO) – Aggregator – Transportation of passengers,

providing hotel/guest house

Situations Who is liable to pay GST

If ECO located in taxable territory
If ECO doesn’t have physical presence in taxable
territory
If ECO has neither physical nor any
representative in the taxable territory
ECO is liable to pay GST e.g. Ola
Person representing ECO e.g. Uber
Person appointed by ECO for purpose of paying
tax e.g. AIRBNB

Supply of following goods are covered under GST

Bidi wrapper, tobacco leaves, supply of lottery, used vehicles, waste & scrap, raw cotton.

New services added in RCM (Recipient needs to be in taxable territory)

1) Services (services of business facilitator) provided by Business facilitator to a banking

company
2) Services provided by an agent of business correspondent to business correspondent
3) Security services (supply of security personnel) provided by any person other than body
corporate to a registered person. However not applicable to
a. Registered person paying tax under composition levy
b. Department or establishment of CG/SG/UT or local authority or governmental
agencies (who has taken reg. only for deducting tax u/s 51)
4) Services supplied by any person by way of transfer of development rights or Floor Space
Index (FSI) for construction of a project by a promoter (services provided to promoter)
5) Long term lease of land (30 years or more) by any person to promoter (developer) against
consideration in the form of upfront amount or periodic rent for construction of the project
by promoter

Note - the provisions of this notification, in so far as they apply to the Central Government, State
Government, shall also apply to the Parliament and State Legislature.

Real estate sector (only for developer taking benefit of lower GST rate 1% for affordable
housing and 5% in other cases )

When developer opts for concessional rate then no ITC is available further

If developer (promoter) does not purchase < 80% of total inputs & input services (excluding
purchase of TDR/FSI/Long term lease premium) from registered person then he needs to pay GST
under reverse charge on the amount of shortfall (e.g. 70% purchased from registered person - so
10% par GST under reverse charge dena padega)

Page | 37
© yogeshvermaclasses | www.Learnzup.com | Whatsapp 8368479717 | Join Free Study Groups on Learnzup