In the Goods and Services Tax (GST) framework, the primary principle is that the supplier of goods or services is responsible for the payment of GST. This rule ensures that taxes are collected at the point of origin and then remitted to the government. However, there are specific scenarios where this responsibility shifts to the recipient of goods or services under a mechanism known as the Reverse Charge Mechanism (RCM) . What is Reverse Charge Mechanism in GST? Under the reverse charge mechanism, the obligation to pay GST that has GST registration in Coimbatore is shifted from the supplier to the recipient. This means that the recipient is required to calculate and directly pay the tax to the government instead of the supplier. This approach primarily applies to certain goods and services as notified by the government, as well as in cases of imports or transactions with unregistered suppliers under specific conditions. Why Does the Reverse Charge Mechanism Exist? The reverse
The Goods and Services Tax (GST) regime in India has brought various concepts to standardize indirect taxation, two of which are Mixed Supply and Composite Supply . These terms might sound similar but have distinct meanings and implications under GST. Correctly categorizing supplies is crucial, as it impacts the applicable tax rates and compliance. Principal Supply: This refers to the good or service which constitutes the predominant element of a composite supply and to which any other goods or services are ancillary. Tax Implications: GST is charged based on the tax rate applicable to the principal supply, irrespective of the tax rates of ancillary items. Define Composite Supply A composite supply consists of two or more goods or services that are naturally bundled and provided together in the usual course of business, with one item being the principal supply. These items are typically sold as a package and are not intended to be offered separately. Example: A common example of a