TaxTMI 
TaxTMI 
TaxTMI 
Ours is a Private Limited Company and we are registered dealer under GST. We have made payment to a labour contractor for repairs work done in our factory. Payment is in excess of Rs. 20 Lakhs in 1 financial year. He is an individual and is an unregistered dealer under GST. We want to know what impact it will have on us with respect to GST.
GST liability in case payment to Unregistered Service Provider exceeds Rs. 20 Lakhs
Ashish Gupta
Company Not Liable for GST Under RCM for Payments Over Rs. 20 Lakhs to Unregistered Contractor Post-October 2017 A private limited company, registered under GST, inquired about the GST implications of paying over Rs. 20 lakhs to an unregistered labor contractor. The consensus among respondents is that since the payment was made after October 13, 2017, the company is not liable for GST under the Reverse Charge Mechanism (RCM). The contractor, however, is at risk for not registering and paying GST, and should be informed of potential penalties. The company should ensure the contract terms clarify tax responsibilities and maintain records to avoid future disputes. The contractor may consider the composition scheme if eligible. (AI Summary)