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RCM COMPOSITION DEALER

Rounak Agarwal (Accountant) (81 Points)

21 July 2020

If I am a composition dealer and have purchases from unregistered dealer do I need to pay RCM? if yes on which cases

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6 Replies

chethan data (298 Points)
Replied 21 July 2020

Not applicable this transaction

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Vijayprakash P (1313 Points)
Replied 21 July 2020

The Composite dealer shall pay tax under reverse charge vide section 9(3)or (4)on the inward supply of goods or services or both received.

Shivam RC (Student) (23683 Points)
Replied 21 July 2020

As per Rule 5 clause (d) of the CGST Rules 2017, A Composition Scheme Dealer is required to pay Tax under sub section (3) and sub section (4) of Section (9) of the CGST Act 2017 on Inward Supplies i.e. RCM on Notified Cases [ 9(3) ] and On Purchase from Unregistered Dealer [ 9(4) ].

But Section 9(4) of the CGST Act 2017 was amended vide CGST Amendment Act 2018 and was changed to only Notified Goods purchased by Notified Dealers. Till now, transaction related to the REAL ESTATE SECTOR is notified for the purpose of Section 9(4).

For example if Cement ( Notified Goods ) is purchased by the Developer ( Notified Person ) from an Unregistered Dealer, then the Promoter is required to pay tax under RCM @ 28%.

Usually Developers do not opt for Composition Scheme. So as of now, RCM on Purchase from URD is not applicable on Composition Scheme.

Once the Government notifies any other goods or services for the purpose of 9(4), then you have to pay tax under RCM.

Regards,
Shivam RC.

5 Like

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 21 July 2020

No RCM under 9(4) , is Scrapped.

As per Notification 38/2017 CT (R) amending the principal Notification 8/2017 CT stating that The exemption contained in the notification No. 8/2017-Central Tax (Rate) dated
the 28th June, 2017 as amended by this notification shall apply to all REGISTERED persons Till the 31st day of March, 2018. & further many more notifications being issued which extends the same.

In above , the Composition Dealer also Cover Under Registered Person .

So Composition dealer is not required to pay tax on inward supply from URD.

Note : As of Today the RCM on Inward supply from URD Applicable only on Developers/Promotors. (Noti. 7/2019 CT rate)

2 Like

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 22 July 2020

No.......there is no RCM on inward supply from URD except if Receptient is Promotor/developer that to be subject to conditions prescribed in Notification 7/2019 CT (r).

So for your RCM is not applicable