GST reverse charge mechanism deferred till Sept 30

The government has kept in abeyance GST provisions relating to reverse charge mechanism for another three months till September-end.

In a notification, the Central Board of Indirect Taxes and Customs (CBIC) said the provision of reverse charge mechanism (RCM) will remain suspended till September 30, as against the earlier date of June 30.

Under the RCM, registered dealers are required to make tax payments in case they procure goods from unregistered businesses.

A ministerial panel under Bihar Deputy Chief Minister Sushil Modi was constituted in March to iron out issues being faced by businesses under the reverse charge mechanism.

Deloitte India Partner M S Mani said the extension indicates that the government has been sensitive to feedback on reducing GST complexities. “Since the extension is only being given three months at a time, it signifies that the same may be reintroduced as one more anti-evasion measure if GST collections do not meet targets,” Mani said.

EY Partner Abhishek Jain said this extension was much sought for as the industry genuinely wanted some time before adhering to additional compliances envisaged for such procurement.