As per News Reports, the provisions relating to Reverse Charge Mechanism (RCM) under GST have been further Deferred by Revenue Deptt. for 3 months, i.e. from 30 June 2018 to 30 Sept. 2018, for which CBIC will issue the Notification shortly.
GST Reverse Charge Mechanism (RCM) further Deferred/ Suspended till 30 June 2018: CBEC Notification
The CBEC has notified that the reverse charge mechanism (RCM), under Section 9(4) of the CGST Act, 2017/ Section 5(4) of the IGST Act, 2017, has been further deferred/ suspended till 30 June 2018, in line with GST Council recommendations dt. 10 March 2018. In the meantime, a Group of Ministers (GoM) will look into the modalities of its implementation to ensure that no inconvenience is caused to the trade and industry.
CBEC Notifies Partial Suspension of ‘Reverse Charge Mechanism (RCM) under GST till 31 March 2018
GST Council, in its 22nd Meeting dt. 6 Oct. 2017, has recommended that the reverse charge mechanism (RCM) under Section 9(4) of the CGST Act, 2017/ Section 5(4) of the IGST Act, 2017 shall remain deferred/ suspended till 31.03.2018 and will be reviewed by a committee of experts.
Accordingly, the CBEC has notified suspension of Reverse Charge Mechanism (RCM) till 31 March 2018 under Section 9(4) of the CGST Act, 2017/ Section 7(4) of the UTGST Act, 2017/ Section 5(4) of the IGST Act, 2017. There is nothing in the Notification on the effective date of RCM suspension. However GSTN has tweeted on 12 Oct. 2017 that the RCM Suspension will be applicable w.e.f. the date of Notification (i.e. 13 Oct. 2017).
It may be noted that there is no change on reverse charge provisions under Section 9(3) of CGST/ SGST Acts, Section 7(3) of UTGST Act and Section 5(3) of the IGST Act, relating to GTA, Legal Services provided by an Advocate, etc. and for that reason only it’s called to be a partial suspension of RCM till 31 March 2018.
This partial suspension of RCM is basically meant for convenience of large taxpayers and survival of unregistered taxpayers. It will provide an opportunity to such taxpayers with more time till 31 March 2018, to be familiar with the compliance requirements. Meanwhile the Government will also be able to streamline the relevant procedures. In fact large/ registered businesses were reluctant to make compliance/ pay tax on behalf of small/ unregistered businesses and they were avoiding to do business with them. This will benefit small businesses and substantially reduce compliance costs.
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