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RCM on URD purchase

04 March 2019

my business activity is gold and jewellery and i have purchase gold from URD (individual person) than RCM is applicable or not.?

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9 Replies

Sahil Jain (FAFD, DISA, CA) (Practicing Chartered Accountant ) (2476 Points)
Replied 04 March 2019

No RCM for goods purchased from unregistered person under GST

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Niteesh Sinha (other) (280 Points)
Replied 04 March 2019

RCM from URD has been amended recently, and will be applicable for specified dealers only. So, no RCM from URD purchase as on date.

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pritesh (CA Final student) (7101 Points)
Replied 04 March 2019

Press Information Bureau
Government of India
Ministry of Finance
13-July-2017 18:57 IST
Further clarification on tax in reverse charge on gold ornaments;
Sale of old jewellery by an individual to a jeweller will not make the jeweller liable to pay tax under reverse charge mechanism on such purchases;
However, if an unregistered supplier of gold ornaments sells it to registered supplier, the tax under RCM will apply.

In the GST Ki Master Class held yesterday, in one of the replies given to an on-the-spot-question, it was informed that purchase of old gold jewellery by a jeweller from a consumer will be subject to GST @ 3% under reverse charge mechanism in terms of the provisions contained in Section 9(4) of the CGST Act, 2017.

On further examination, it is felt that the issue needs to be clarified.

Section 9(4) of the said Act mandates that tax on supply of taxable goods (gold in this case) by an unregistered supplier (an individual in this case) to a registered person (the jeweller in this case) will be paid by the registered person (the jeweller in this case) under reverse charge mechanism. This provision, however, has to be read in conjunction with section 2(105) read with section 7 of the said Act. Section 2 (105) defines supplier as a person supplying the goods or services. Section 7 provides that a supply is a transaction for a consideration by a person in the course or furtherance of business.

Even though the sale of old gold by an individual is for a consideration, it cannot be said to be in the course or furtherance of his business (as selling old gold jewellery is not the business of the said individual), and hence does not qualify to be a supply per se. Accordingly, the sale of old jewellery by an individual to a jeweller will not attract the provisions of Section 9(4) and jeweller will not be liable to pay tax under reverse charge mechanism on such purchases. However, if an unregistered supplier of gold ornaments sells it to registered supplier, the tax under RCM will apply.

vikram kerekar (1241 Points)
Replied 08 March 2019

rcm is applicable on urd expenses which is debited to profit and loss acc from 1st feb 19. pls gaid mi.

Sahil Jain (FAFD, DISA, CA) (Practicing Chartered Accountant ) (2476 Points)
Replied 08 March 2019

Dear Vikram

Note that there is no RCM for URD Expenses from 1.2.19

Government shall notify class of person and categories of supplies on which RCM shall be applicable.

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vikram kerekar (1241 Points)
Replied 08 March 2019

Can u send mi pls notify class of person and categories of supplies on which RCM shall be applicable.

Sahil Jain (FAFD, DISA, CA) (Practicing Chartered Accountant ) (2476 Points)
Replied 08 March 2019

Till now nothing has been notified by Government in this matter.

Hence no RCM till they come up with notification in this regards.

vikram kerekar (1241 Points)
Replied 08 March 2019

i have attached rcm file what about this. notification pls gaid mi

Attached File : 1897272 20190308171432 rcm.zip downloaded: 180 times

Sahil Jain (FAFD, DISA, CA) (Practicing Chartered Accountant ) (2476 Points)
Replied 08 March 2019

In your attachments, PDF file with name "1"

Kindly read the end conclusion of that PDF file which also says that as on date there is no RCM on URD supplies.

Since, there are various notifications issued in respect of RCM and which are supposed to be read in together, it creates confusion among many.

So please read the end conclusion part as specified above, that will help you.

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