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Limit of rs.5000/- on rcm coverage

Ronak (accountant) (27 Points)

04 July 2017

With reference to RCM on GST.... Intra state supply from unregistered dealer is exempt upto Rs 5000/- in a day from all the suppliers

Can i know the scope of this 5000/- exemption limit given for supply from local unregistered party.

Do this 5000/- cover only taxable item or includes exempt items also

for example i make the following payment:-

1. Rs 4800 payment for purchase of Printer from local unregistered party.

2. Rs 1200 payment for purchase of Milk(EXEMPT) from local unregistered party.

Now will i be liable for RCM payment.

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8 Replies

CA Saloni (Manager-Accounts & GST Consultant) (5124 Points)
Replied 04 July 2017

Sir,

5000/- limit is for purchase from unregistered dealer/dealers in a single day that too within the state.This is not applicable on inter state purchase.

Tax is paid under reverse charge on taxable inward supply.Its illogical to pay tax for an exempted item.If an item is exempt tax will be paid neither by seller nor by receiver.

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Ronak (accountant) (27 Points)
Replied 04 July 2017

dear saloni mam,

I totally agree with your humble reply. But my doubt is because nowhere in the law its written 5000 is the limit for taxable supply. Only 'Supply' word is written there. Logically i too agree that Exempt Items will not make me fall under RCM. But we need to interpret the law clearly. With reference to my example as per law i doubt that i will fall in RCM for even 4800/-(although below 5000/-) because my supplies(taxable and non taxable) has exceeded 5000/-(i.e. 6000/-)

Kindly interpret the law for your kind answer..

kapil (accountant) (178 Points)
Replied 06 July 2017

what is this line can anyone explain..services of goods transport agency in relation to transportation og goods..5 precent with no ITC keeping in view this I want to know if rcm apply than so what will happen..can service recipient take ITC on 5 percent

kusum maheshwari (30 Points)
Replied 22 July 2017

@ ronak

only the word supply is used but that shall be interpreted as taxable supply, because if we interpret as both taxable and non taxable/ exempt supply how will you pay tax on it what will be the hsn code for it, what is the rate etc. therefore interpreting supply as taxable supply is more logical and correct

Ronak (accountant) (27 Points)
Replied 25 July 2017

@ kusum ji,

Thanx a ton for the sincere answer.Actually we too presumed this that exempt items should not be counted. But since the law is not very clear and RCM is a typical provision of GST we have to be very careful.

thanks a lot again