Gst section 94 ( 4 )

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Querist : Anonymous

Querist : Anonymous (Querist)

06 September 2017 Dear sir, mera q. ye hai k gov. ne 5000/- limit decide kiya hai unregistered se purchase ki , to hum RCM taxable item par apply kare ya exempted item par bhi RCM apply kare.

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Guest (Expert)

06 September 2017 To understand 5000 limit given by government please see this video https://youtu.be/AW3DIAc8QF4

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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27 July 2024 Under the GST law, Section 94(4) refers to the rules set by the government regarding the Reverse Charge Mechanism (RCM) for purchases from unregistered suppliers. Here's a breakdown of how the ₹5,000 limit works in the context of RCM:

### **GST Section 94(4) Overview**

**Section 94(4)** deals with the procedure and conditions related to the application of reverse charge on the supply of goods or services from unregistered suppliers.

#### **Key Points:**

1. **Threshold Limit:**
- The government has prescribed a limit of ₹5,000 per day, per supplier for which the Reverse Charge Mechanism (RCM) will apply. This means that if you are purchasing goods or services from an unregistered supplier, RCM will apply only if the value of the goods or services from that supplier exceeds ₹5,000 in a single day.

2. **Scope of RCM:**
- RCM under this provision applies to both taxable and exempted supplies when the supplier is unregistered. However, the applicability of RCM on exempted items may depend on specific conditions and notifications issued by the government.

### **Application of RCM:**

1. **Taxable Goods or Services:**
- For taxable items (i.e., goods or services on which GST is chargeable), RCM applies if the total purchase value from an unregistered supplier exceeds ₹5,000 in a day. You are required to pay GST under RCM and can claim Input Tax Credit (ITC) if eligible.

2. **Exempted Goods or Services:**
- For exempted items (i.e., goods or services that are not subject to GST), RCM generally does not apply. However, if the government issues specific notifications or rules that include exempted items under RCM, you should comply with those.

### **Procedure:**

1. **Ensure Compliance:**
- If your purchases from an unregistered supplier exceed ₹5,000 in a day, you need to apply RCM on those transactions and pay the applicable GST.

2. **Maintain Records:**
- Maintain proper records of purchases from unregistered suppliers and ensure that you correctly report the RCM transactions in your GST returns (GSTR-1 and GSTR-3B).

3. **Consult Notifications:**
- Regularly check for any government notifications or amendments that might impact the applicability of RCM on exempted goods or services.

### **Summary**

- **Taxable Items:** RCM applies if the purchase value from an unregistered supplier exceeds ₹5,000 in a day.
- **Exempted Items:** Generally, RCM does not apply to exempted items unless specified otherwise by government notifications.
- **Compliance:** Ensure proper payment of GST under RCM and maintain accurate records for reporting in GST returns.

For specific cases or any further clarification, consult a GST practitioner or tax advisor to ensure compliance with the latest rules and regulations.

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