{"id":3158,"date":"2023-02-17T02:58:25","date_gmt":"2023-02-16T21:28:25","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=3158"},"modified":"2025-03-26T10:40:41","modified_gmt":"2025-03-26T05:10:41","slug":"what-is-the-reverse-charge-mechanism-under-goods-and-services-tax-gst","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-is-the-reverse-charge-mechanism-under-goods-and-services-tax-gst\/","title":{"rendered":"What is the Reverse Charge Mechanism under Goods and Services Tax (GST)?"},"content":{"rendered":"<h2>\u00a0What is\u00a0 Reverse Charge Mechanism (RCM)?<\/h2>\n<ul>\n<li>It is a mechanism where the <strong>recipient of the goods or services is liable to pay GST instead of the supplier.<\/strong><\/li>\n<li><strong>Typically, the supplier of goods or services pays the tax on supply<\/strong>. <strong>Under the<\/strong> <strong>RCM,<\/strong> the recipient of goods or services becomes liable to pay the tax, i.e., <strong>the liability of tax payment gets reversed.<\/strong><\/li>\n<li><strong>Objectives<\/strong>:<\/li>\n<li>\u00a0to widen the scope of levy of tax on various unorganized sectors;<\/li>\n<li>\u00a0to exempt specific classes of suppliers of goods\/services;<\/li>\n<li>to tax the import of services (since the supplier is based outside India);<\/li>\n<li><strong>Under the RCM<\/strong>, <strong>the recipient of goods cannot claim an Input tax credit (ITC)<\/strong> as the supplier has not paid any tax for their sales.<\/li>\n<\/ul>\n<h3>What is an Input tax credit (ITC) under GST?<\/h3>\n<ul>\n<li>ITC <strong>means GST paid by a taxable person on any purchase of goods<\/strong> and\/or services that are <strong>used or will be used for business<\/strong>.\u00a0<\/li>\n<li><strong>ITC value can be reduced from the GST payable on the sales<\/strong> by the taxable person after fulfilling some conditions.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3>Q1)\u00a0 What is Tax incidence?<\/h3>\n<p>Tax incidence is a measure of who ultimately pays a tax, either directly or through the tax burden. This\u00a0burden can be split between buyers and consumers, or different groups in the economy.<\/p>\n<p><strong>Source:\u00a0<\/strong><a href=\"https:\/\/www.deccanherald.com\/business\/business-news\/scrap-steel-industry-seeks-reverse-charge-mechanism-in-gst-1192073.html\" target=\"_blank\" rel=\"nofollow noopener\"><u>Scrap steel industry seeks \u2018reverse charge mechanism\u2019 in GST<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Under Reverse Charge Mechanism the recipient of goods or services is liable to pay GST instead of the supplier.<\/p>\n","protected":false},"author":5,"featured_media":3159,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-3158","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/3158","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=3158"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/3158\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/3159"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=3158"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=3158"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=3158"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}