The Central Government has decided to further extend the implementation of the reverse charge mechanism ( RCM ) for further one year under the Goods and Services Tax (GST) regime.
Notification in this regard has been issued by the Central Board of Indirect Taxes and Customs (CBIC) for exempting payment under reverse charge under sections 9 (4), 5 (4) and 7 (4) of the CGST Act, IGST Act and UTGST Act respectively.
As per the new notification, there will not be the reverse charge on the supply of goods or services by unregistered person till September 30, 2019.
The GST Council meeting held at New Delhi in October, had decided to suspend the reverse charge mechanism under sub-section (4) of section 9 of the CGST Act, 2017 and under subsection (4) of section 5 of the IGST Act, 2017 till 31th March 2018 and will be reviewed by a committee of experts. This was further extended till 3oth September 2018.
This was a benefit to small businesses and substantially reduce compliance costs.
Parallelly, a group of ministers under Bihar deputy chief minister Sushil Kumar Modi has recommended doing away with reverse charge mechanism, a key anti-evasion measure under the new tax regime.
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