RCM for sand and jelly purchase -URD

[Rajaraman Iyer]

Sir/s,

My client is a contractor who purchases ready mix concrete. However for some works, he needs to procure sand, jelly from unregistered dealers. Amounts are paid by crossed cheques. However the taxability under GST by discharging tax under RCM is under question. I request for clarification, if we have to pay GST @ 5% under RCM and claim tax credit under ITC? though the GST circular on RCM does not specify these items, this practice is being followed by some of his co-businessmen.

[Venkataprasad Pasupuleti]

There is no GST liability on such items under RCM if procured from unregistered vendors.

If he pays, the same can be availed as ITC.

[KASTURI SETHI]

I support the views of Sh. CAVenkataprasad Pasupuleti Ji. Section 9(4) of CGST Act has been replaced vide S.4 of CGST (Amendment) Act, 2018 w.e.f. 1.2.19. Only specified categories of goods or services or both from unregistered suppliers are to be taxed under RCM. Registered persons are also to be notified for payment of tax under RCM.

Both of the goods mentioned by you have not specified under RCM under Section 9(4) of CGST Act so far..

AI Summary

Reverse charge mechanism not applicable to sand and jelly from unregistered suppliers; tax paid may qualify for input tax credit. Purchases of sand and jelly from unregistered suppliers are not subject to the reverse charge mechanism because RCM applies only to categories of goods or services specifically notified; these materials are not specified for RCM, and if tax is paid it may be claimable as input tax credit subject to general ITC rules.