"Understanding the GST implications of purchasing goods and services from unregistered suppliers on a reverse charge basis"

There are two kinds of methods of payment of GST on reverse charge mechanism (RCM) ,under Section 9(3) and 9(4) of CGST /SGST Act,2017.

Section 9(3) RCM is applicable to goods as per Notification 4/2017- CTR and to services as per Notification 13/2017- CTR.

Section 9(4) RCM is applicable for goods and services procured from unregistered suppliers by notified class of registered persons.

At present from 1.4.2019, Section 9(4) RCM applicable to the builders in real estate Sectors in terms of notification 7/2019-CTR when they procure goods and services from unregistered suppliers and tax is to be paid by them on RCM basis if the procurement falls short of 80:20 ratio prescribed under Notification 3/2019- CTR .

Therefore, in respect of goods and services other than of real estate sector, Section 9(4) is not applicable when purchases of goods and services are made from other unregistered persons .