Reverse charge

Reverse charge means that GST is not charged by the person selling the goods and/or services or both but is paid by the person purchasing the goods and/or services or both. Certain purchases of goods and services are placed under Reverse charge. Thus, the seller of goods and/or services placed under reverse charge will not charge GST but instead the purchaser of goods and/or services will deposit GST in the Government account and claim it as Input GST. Goods and/or services falling under reverse charge Mechanism are: payment of fee to lawyer; payment for use of copyright; purchase of Goods and/or Services by registered person from unregistered person; transports of goods; Insurance commission; and sponsorship.

Categorising GST FOR Accounting Purpose:- GST paid (Input GST) individually (Input CGST, SGST and IGST) is set off against GST Collected (Output GST) individually (Output CGST, SGST and IGST) in the prescribed order. Therefore, it is necessary that separate accounts for Input GST and Output GST for each category of GST, i.e., CGST, SGST and IGST be maintained. It will enable the taxpayer to follow prescribed order of setting off the each category of GST. The GST Account maintained are:

1. Input CGST: Input CGST is the CGST paid on intra-state purchase (supply) of goods and/or Services or both. Input CGST can be set off against CGST collected, i.e., output CGST and IGST collected (i.e., output IGST) in that order. Besides the above, taxpayer may pay CGST in Government Account. It is also termed as input CGST.

2. Input SGST: Input SGST is the SGST paid on intra-state purchase (supply) of Goods and/or Services output IGST) in that order. Besides the above, taxpayer may pay SGST in Government Account. It is also termed as Input SGST.

REMEMBER:-- On intra-state supply of goods and/or services or both, both CGST and SGST are levied at 50% of the specified rate. For example, if specified rate is 18%, both CGST and SGST will br levied @ 9% each.

3. Input IGST: Input IGST is the IGST paid on inter-state purchase (supply) of Goods and/or Services or both and it can be set off against IGST collected (i.e., Output IGST), CGST Collected (i.e., Output CGST) and SGST collected (i.e., Output SGST) in that order. IGST Is also levied on goods and/or services imported from outside the country. Beside the above, taxpayer may pay IGST in Government Account. It is also termed as Input IGST.

4. Output CGST: Output CGST is the CGST collected on intra-state sale (supply) of Goods and/or Services or both along with SGST.

5. Output SGST: Output SGST is the SGST collected on intra-state sale (supply) of Goods and/or Services or both along with CGST.

6. Output CGST: Output IGST is the IGST collected on intra-state sale (supply) of Goods and /or Services or both. In the case of intra-state sale only IGST is levied.