Is GST to be payable on RCM, if registeresd person purchases from unregistered person.

[Rajesh Kumar]

Sir/Madam

I want to know the provisions of Section 9(4) of the CGST amended time to time. If a registered person make purchases of goods/ services from unregistered persons, then the registered person is required to pay GST on that purchases or services taken from unregistered person.

[KASTURI SETHI]

If a registered person make purchases of goods/ services from unregistered persons, RCM is applicable to only specified goods, services and specified persons (Not applicable to all goods and services). See Notification No. 7/19-CT(R) dated 29.3.19 and 24/19-CT(R) dated 30.9.19.

[Shilpi Jain]

The liability under 9(4)presently is is for persons executing residential contacts at 5% (net) GST rate. In the 45th GST Council minutes it is also proposed to bring Mentha oil.

Apart from these , liability does not exist presently under this provision.

[Ganeshan Kalyani]

Sir, please specify the goods that you are going to buy from an unregistered person. We shall let you know the applicability of RCM.

AI Summary

Reverse charge mechanism applies only to notified supplies; general purchases from unregistered suppliers do not attract RCM.
The Reverse Charge Mechanism does not automatically apply to purchases from unregistered persons; RCM arises only for supplies expressly notified by law or notifications, which limit liability to specified goods, services and classes of suppliers. In practice the provision operates for notified supplies such as residential construction contracts taxed at the concessional net rate, with proposals to add mentha oil, and otherwise a registered purchaser has no general RCM obligation for purchases from unregistered vendors.