TaxTMI 
TaxTMI 
If Per day payment is below 5000, Bill is 6000, is RCM applicable?
If Per day payment is below 5000, Bill is 6000, is RCM applicable?
29 Aug 2017 
3 Replies 
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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. (AI Summary)
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. (AI Summary)