Meaning of unregister person in gst reverse charge case

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Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2017 Dear sir

Please advise about unregistered person under gst reverse charge??

Rahul varshney

Rahul varshney (Expert)
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12 July 2017 If you are Registered in GST and do transaction with the person who is not registered under GST, than you have to pay the amount of tax on that transaction, this is reverse charge mechanism. (if transaction exceed Rs. 5000/- per day.)

Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2017 If person is registered in gst but raising bill to registered company without gst as they have not cross limit of turnover 20lac..then who will be laibale to pay gst??

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Rahul varshney

Rahul varshney (Expert)
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12 July 2017 If both are registered, than no provision of Reverse charge is applicable.
It is only in case of unregistered person.

Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2017 Then who will pay gst

Rahul varshney

Rahul varshney (Expert)
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12 July 2017 The purchasing party have to pay GST, and Input Tax Credit of the same will be available as per the condition therefter.

Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2017 So in this case service receiver has to pay gst but you are saying no reverse charge applicable.. how is it posible..you are agree with both case..

Rahul varshney

Rahul varshney (Expert)
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13 July 2017 In GST Reverse charge is applicable on Goods as well as on Services. Now, First let me clear about what you are asking, and whta you actually wants to know. Are you asking abouts reverse charge on Goods or on Services

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Querist : Anonymous

Querist : Anonymous (Querist)

13 July 2017 I just want to know
1) the defination of unregistered person
2) if any supplier or indivisual is registered in gst but gst is not applicable for them as turnover limit not cross then registered person is laible to pay or not???
3) if an indivisual raise invoice with gst amount to a registered person but not deposited gst then who is laible to pay??

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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03 August 2024 Let's address your questions about GST and reverse charge mechanism, and clarify the issues related to registered and unregistered persons.

### 1. Definition of Unregistered Person under GST

An **unregistered person** under GST is an individual or entity that is not registered under the Goods and Services Tax Act. In other words, they are not required to obtain a GST registration due to the nature of their business, their turnover being below the threshold limit, or other criteria set by the GST law.

**Key Points:**
- **Threshold Limit:** Businesses with a turnover below the prescribed threshold (e.g., ₹20 lakh for most states in India) are not required to register for GST unless they voluntarily opt to do so.
- **Type of Supply:** If a person makes supplies below the threshold and is not registered, they are considered an unregistered person for the purposes of GST.

### 2. GST Liability When Supplier is Registered but Below Turnover Threshold

If a **supplier is registered for GST** but is not required to charge GST due to their turnover being below the threshold limit, the situation is as follows:

- **Registered Supplier Below Threshold Limit:** If the supplier is registered but their turnover is below the limit, they might still have GST obligations based on their registration status. However, they are generally required to comply with GST regulations, including charging GST if applicable.

- **Reverse Charge Mechanism:** In the reverse charge mechanism, the liability to pay GST shifts from the supplier to the recipient of the goods or services. For reverse charge to apply, the supplier must be an **unregistered person**. If the supplier is registered but has not crossed the turnover limit, they are not typically considered unregistered, and hence reverse charge does not apply.

Therefore, in cases where the supplier is a registered person (even if their turnover is below the threshold), the reverse charge mechanism does not usually apply.

### 3. Liability for GST Not Deposited by a Registered Supplier

If a **registered supplier** raises an invoice with GST and does not deposit the GST collected, the liability is generally:

- **Supplier's Responsibility:** The supplier is legally required to deposit the GST collected from the recipient. If they fail to do so, the supplier remains liable to pay the tax to the government, and they may face penalties or legal actions for non-compliance.

- **Recipient’s Responsibility:** The recipient of the goods or services may claim input tax credit (ITC) based on the invoice, provided that the supplier has complied with the GST regulations and deposited the tax. If the supplier fails to deposit the GST, the recipient may face issues claiming ITC.

In summary:
1. **Unregistered Person:** A person not required to register under GST, typically due to turnover being below the threshold.
2. **Registered Supplier Below Threshold Limit:** If registered, GST obligations apply, but reverse charge does not typically apply unless the supplier is unregistered.
3. **Invoice with GST but Not Deposited:** The registered supplier is liable to pay the GST; the recipient's ability to claim ITC might be affected if the supplier fails to deposit the tax.

Understanding these nuances is crucial for compliance with GST regulations and avoiding potential issues with tax liabilities.