What is reverse charge mechanism??

The supplier of Goods generally pays the Tax on supply but on occasion when the reciever/ purchaser becomes liable to pay taxes, such a condition is termed as reverse charge. The concept of reverse charge under GST came into force to increase tax compliance and tax revenues. The earlier taxation system was unable to collect service tax from various unorganized sectors like goods, transport etc.

Services under Reverse charge

Goods transport agencies providing services to any factory, society, co-operative society, body corporate.

Legal services by any advocate to any business entity located in the taxable territory.

Service supplied by any insurance agent to any person carrying business, located in the taxable territory.

Services supplied by a recovery agent to a banking company or a financial institution

Supply of services by an author or music composer, photographer located in the taxable territory