Lok Sabha Question No. 1953 (UNSTARRED), answered on 2018-12-21
Subject: GST Reverse Charge Mechanism
Ministry: FINANCE
Asked by: JANAK RAM

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

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## LOK SABHA UNSTARRED QUESTION No.1953 TO BE ANSWERED ON FRIDAY, DECEMBER 21, 2018/AGRAHAYANA 30, 1940 (SAKA)

## GST REVERSE CHARGE MECHANISM

## †1953. SHRI JANAK RAM:

Will the Minister of FINANCE be pleased to state:

(a)  the  details  of  Reverse  Charge  Mechanism  under  Goods  and  Services  Tax  (GST)  along  with  the problem being faced by industries due to the said provision;

(b) the time by which Reverse Charge Mechanism is likely to be removed; and

(c) whether the Government proposes to amend the rules of Reverse Charge

Mechanism and if so, the details thereof?

## MINISTER OF STATE FOR FINANCE (SHRI SHIV PRATAP SHUKLA)

(a) The legal provisions pertaining to payment of tax on reverse charge basis are contained in sub-sections (3) and (4) of section 9 of the Central Goods and Services Tax Act, 2017 (CGST Act for short) and subsections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act, 2017 (IGST Act for short).

The trade and industry bodies, especially small and medium enterprises, highlighted the fact regarding the increase in compliance burden and higher cost of business due to the liability to pay tax on reverse charge basis in specified cases.

(b) The provisions of sub-section (4) of section 9 of the CGST Act and sub-section (4) of section 5 of the IGST  Act  have  been  suspended  till  30th  September,  2019  vide  notification  No.  22/2018-Central  Tax (Rate) dated 06th August, 2018 and notification No. 23/2018-Integrated Tax (Rate) dated 06th August, 2018 respectively.

However, it may be noted that the provisions of sub-section (3) of section 9 of the CGST Act and subsection (3) of section 5 of the IGST Act which provide for payment of tax on reverse charge basis by the recipient  of  certain  specified  categories  of  supply  of  goods  or  services  or  both  are  still  in  operation. Notifications No. 4/2017-Central Tax (Rate) and No.4/2017-Integrated Tax (Rate) both dated 28.06.2017 specify certain supplies of goods on which tax shall be payable by the recipient on reverse charge basis while  notifications  No.  13/2017-Central  Tax  (Rate)  and  No.10/2017-Integrated  Tax  (Rate)  both  dated 28.06.2017 specify certain supplies of services on which tax shall be payable by the recipient on reverse charge basis.

(c)  Sub-section (4) of section 9 of the CGST Act and sub-section (4) of section 5 of the IGST Act have been  amended  vide  the  CGST  (Amendment)  Act,  2018  and  the  IGST  (Amendment)  Act,  2018 respectively  so  as  to  provide  that  the  Government,  on  the  recommendations  of  the  Council,  by notification,  may  specify  a  class  of  registered  persons  who  shall,  in  respect  of  supply  of  specified categories of goods or services or both received from an unregistered supplier, pay tax on reverse charge basis as the recipient of such supply of goods or services or both. The said amendment Acts received the assent of the Hon'ble President of India on 29th August, 2018 but the amended provisions shall come into force on a date to be notified by the Central Government.