GST: GoM, officials’ panel to deliberate on bringing back reverse charge mechanism

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New Delhi, Apr 16: A Group of Ministers (GoM), along with a panel of government officials will meet today to deliberate on bringing back the liability to pay tax on reverse charge mechanism under GST, as a part of a larger plan to curb tax evasion.
In the last meeting, Goods and Services Tax (GST) Council had decided to defer reverse charge mechanism (RCM) till June 30. However, some states have insisted that it should be re-introduced, as it will help tax authorities plug revenue leakages.
Bihar Finance Minister Sushil Modi, Punjab FM Manpreet Singh Badal, Kerala FM Thomas Issac, among others are part of the GoM.
“Some states were insisting on bringing back reverse charge mechanism. On Monday, we will decide on the exact shape and form if we decide to re-introduce it,” a senior government official said.
“We need to explore if RCM can be brought back with some tweaking in the rules. For instance, it could be applicable for only a particular category of taxpayer. Or there could be some kind of monetary exemption for which tax (on reverse charge basis) may not have to be paid,” another official said.
In January, the Council had already decided to re-introduce RCM, but only for dealers under composition scheme–a simpler scheme for small taxpayer, aimed at easing compliance burden.
Reverse charge is a mechanism where the recipient of the good or service will have to pay tax, which is otherwise paid by the supplier.