If Per day payment is below 5000, Bill is 6000, is RCM applicable?

[RameshBabu Kari]

If Per day payment is below 5000, Bill is 6000, is RCM applicable?

[RAMESH PRAJAPATI]

If purchase bill is for ₹ 6000/- raised by unregistered dealer, then RCM is payable.

[KASTURI SETHI]

Dear Querist,

If any unregistered person bills ₹ 6000/- but payment is below ₹ 5000/- per day, it will be treated as modus operandi to avoid GST.

[KASTURI SETHI]

In my view there is no such restriction. Cash has to be deposited against the invoice under RCM. Credit can be claimed same month. It doesn't mean there is bar for future availment of ITC. When you pay cash against RCM invoice, there is no sword on assessee.

AI Summary

Reverse charge mechanism applies when supplies are received from unregistered dealers, requiring tax payment on receipt despite fragmented daily payments. The reverse charge mechanism (RCM) applies where a supply is invoiced by an unregistered person, obligating the recipient to pay tax under RCM. Repeated low-value daily payments against larger invoices may be regarded as an evasion modus operandi and invite scrutiny. Tax paid in cash under RCM can be deposited against the invoice and Input Tax Credit may be claimed in the same month or subsequently, provided documentation and compliance requirements are met.