Reverse Charge Mechanism in GST
It is always the case where the supplier of goods and services is liable to pay the GST. But, when it comes to Reverse Charge Mechanism, the receiver of goods and services has to pay the tax, meaning that the tax liability is reversed. Reverse Charge means the liability to pay tax while GST return filing is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply. According to the normal GST return filing procedure, the supplier sells goods/services to the receiver and the latter pays the former for the same. This payment also includes GST, which the supplier then pays to the government. But, in the case of the Reverse Charge Mechanism in GST, tax is paid by the receiver directly to the government; it does not go through the supplier and is not part of the exchange of goods/services. When is a reverse charge applicable? Several acts govern the reverse charge scenarios for intrastate transaction