Difference Between Reverse Charge And Forward Charge in GST

What is Reverse charge mechanism and forward charge mechanism in gst? What is the difference between these two. This presentation explains you the difference. For more information on and topic of GST, visit Taxmann's blog https://www.taxmann.com//BlogPost.aspx.For GST Billing & Invoicing you can use our software Taxmann's one solution: http://www.taxmann.com/onesolution/ and get your free demo.

1. DIFFERENCE BETWEEN REVERSE
CHARGE AND FORWARD CHARGE IN
GST

2. 1. Meaning of Forward Charge &
Reverse Charge 
Forward Charge: Forward Charge or direct charge is
the mechanism where the supplier of goods or
services or both is liable to pay tax.
Reverse Charge: Reverse Charge is only a mode of
collection of GST on Supplies of goods or services
where the service receiver will be liable to pay GST to
government.

3. 2.  Who is liable to pay the tax?
Forward Charge: Supplier of the goods or services or
both.
Reverse Charge: Receiver of the goods or services or
both.

4. 3.  Registration
Forward Charge: Required once a supplier meets the
threshold.
Threshold: Aggregate Turnover in a preceding
financial year exceeds Rs. 20 lakhs (Rs 10 lakhs for 11
special category states).
Reverse Charge: All persons who are required to pay
tax under reverse charge have to register for GST
irrespective of the threshold.

5. 4.  Supplier
Forward Charge: Supplier can only be the registered
supplier Unregistered supplier can never collect the
tax.
Reverse Charge: Supplier can be the registered
supplier also, in case of supply of notified goods or
services.

6. 5.  Recipient
Forward Charge: Can be registered or unregistered.
Reverse Charge: Can only be the registered recipient
in RCM for case of 9(3) of CGST and 5(3) of IGST.

7. 6. Example of Forward Charge And
Reverse Charge
Forward Charge: Car vendor (registered) sells the car
and collect the tax from buyer.
Reverse Charge: Car vendor hires the services of
Transporter (GTA, being notified service) then car
vendor himslef shall be liable to pay the GST on such
services.

8. 7. Rates  of Forward Charge And
Reverse Charge
After all, both are inward supplies. So GST rate will be
as same in RCM supply as we see normally.

9. FAQ THAT COULD HELP YOU
Q. Who is liable to pay taxes?
Generally, the person effecting taxable supplies is
liable to pay taxes. However, following are certain
exceptions: [Case of RCM]
a) Reverse Charge: Supply of goods or services or
both, as may be notified by the Government on the
recommendations of the Council, the tax on which
shall be paid by the recipient under reverse charge.

10. FAQ THAT COULD HELP YOU (Contd.)
b) Taxable supply by unregistered supplier to
registered recipient for any goods/ services / both.
c) E-commerce: Categories of services as may be
notified by the Government on the recommendation
of Council the tax on which shall be paid by the
electronic commerce operator if such services are
supplied through it.

11. THANK YOU
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Invoicing: https://www.taxmann.com/onesolution/
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