Purchase from URD

[Kishan Barai]

So if we purchase from URD & pay him via bank & if the amount is below 5000, are we exempted from reverse charge ??

If a buyer of goods is also URD then is he exempted from paying reverse charge even bill cross above 5000 ??

Please elaborate

[Rajagopalan Ranganathan]

Sir,

If the turnover of both supplier and receiver of goods or services or both is less than 20 lakhs rupees they need not take a registration. Since the supplier is not a registered person he cannot issue a taxable invoice.

As per Section 9 (4) of CGST Act, 2017 "the central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this 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.

Therefore payment of central tax on reverse charge arises only when supply of goods or service or both are made by a supplier, who is not registered,to a registered person. If both the supplier and receiver of goods or services or both are unregistered then the question of payment of central tax on reverse charge basis does not arise.

[Kishan Barai]

Thanks for your reply,

If we are Registered &

if we purchase from URD & pay him via bank & if the amount is below 5000, are we exempted from reverse charge ??

AI Summary

Reverse charge applies where an unregistered supplier supplies to a registered recipient; payment mode or amount do not avoid liability. Reverse charge is triggered when a supplier who is not registered supplies taxable goods or services to a registered person, making the recipient liable to pay central tax under reverse charge; an unregistered supplier (below the registration threshold) cannot issue a taxable invoice, and if both supplier and recipient are unregistered reverse charge does not arise.