Lok Sabha Question No. 2991 (UNSTARRED), answered on 2018-08-06
Subject: Reverse Charge Machanism
Ministry: COMMERCE AND INDUSTRY
Asked by: OM PRAKASH YADAV, RODMAL NAGAR

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY

## DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION

## LOK SABHA

UNSTARRED QUESTION NO. 2991. TO BE ANSWERED ON MONDAY, THE 6 TH  AUGUST,  2018.

## REVERSE CHARGE MACHANISM

## 2991.  SHRI OM PRAKASH YADAV: SHRI NAGAR RODMAL:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state:

## वाणिज्य एवं उद्योग मंत्री

- (a) the details of reverse charge mechanism adopted in the industrial sector;
- (b) whether  the  said  mechanism  is  causing  problems  in  the  functioning  of industries and if so, the details thereof;
- (c) the time by which reverse charge mechanism is likely to be banned; and
- (d) whether the Government is considering to bring changes in reverse charge mechanism, if so, the details thereof?

## ANSWER

## वाणिज् य एवं उद्योग मंत्रालय में राज् यमंत्री (श्री सी.आर. चौधरी) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI C.R. CHAUDHARY)

- (a): Under the GST regime, the  provisions  for  reverse  charge  mechanism  on intra-State  supply  of  goods  or  services  or  both  are  contained  in  the following  two  sections  of  the  Central  Goods  and  Services  Tax  Act,  2017 (CGST Act for short):
- i. Section  9(3)  of  the  CGST  Act  empowers  the  Government,  on  the recommendations  of  the  Council,  to  notify  categories  of  supply  of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of the CGST Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. In exercise of this power, the Central Government has notified the list of supply goods and services that would  be  liable  to  tax  under  reverse  charge  under  section  9(3)  of CGST Act, 2017.
- ii. Section 9(4) of the CGST Act provides for liability to pay central tax on the registered recipient in respect of the supply of taxable goods or services or both by an unregistered supplier and all the provisions of the CGST Act shall apply to such recipient as if he is the person liable  for  paying  the  tax  in  relation  to  the  supply  of  such  goods  or services or both.

Similar provisions for reverse charge mechanism exist under section 5(3) and section 5(4) of the Integrated Goods and Services Tax Act, 2017 (IGST Act  for  short)  with  respect  to  inter-State  supplies  of  goods  or  services  or both.

- (b): References  have  been  received  from  various  trade  and  industry  bodies, especially small and medium industries, regarding increase in the cost of doing business and difficulty in compliance with the provisions of reverse charge mechanism contained in section 9(4) of the CGST Act and section 5(4) of the IGST Act.
- (c) & (d): As per the decision of the GST Council in its 28 th meeting held on 21 st July, 2018  at  New  Delhi,  the  provisions  of  reverse  charge  mechanism  under section 9(4) of the CGST Act, 2017 and section 5(4) of the IGST Act, 2017 have been suspended till 30.09.2019.

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