Difference between Reverse Charge Mechanism and Revenue neutral rate

Posted on 11 June 2022 Category : GST terms difference

How to differentiate Revenue neutral rate with Reverse Charge Mechanism?

What is Revenue neutral rate? How does Reverse Charge Mechanism work under GST regime? What are the difference between Revenue neutral rate and Reverse Charge Mechanism?

Focus under GST is to arrive at such rates which would not decrease the current revenue generation by Central & State government. Revenue neutral rate (RNR) is a structure of different rates established in order to match the current revenue generation with revenue under GST. RNR calculation has to include the cascading effect on certain goods having no excise or sales tax implications

Unregistered recipients mean the person who receives taxable supplies without having valid registration under GST Laws. Section 9(4) of the CGST Act, 2017 mandates that tax on supply of taxable goods by an unregistered supplier to a registered person will be paid by the registered person under reverse charge mechanism. This provision, however, must be read in conjunction with section 2(105) read with section 7 of the CGST Act, 2017. Section 2 (105) defines supplier as a person supplying the goods or services. Section 7 provides that a supply is a transaction for a consideration by a person in the course or furtherance of business.

The details about Revenue neutral rate and Reverse Charge Mechanism with simple language from GST terms have been mentioned in this web blog separately. I suggest you to read these articles on Revenue neutral rate and Reverse Charge Mechanism, so as to enable you to have a clear idea on these GST terms.

For your immediate reference, we give below web links on Revenue neutral rate and Reverse Charge Mechanism separately below. You may kindly read the below links to know more about Reverse Charge Mechanism and Revenue neutral rate.

Term Revenue neutral rate (RNR) under GST

Reverse Charge Mechanism Unregistered recipients under GST

The above information easily explains about Reverse Charge Mechanism and Revenue neutral rate.

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Section 1 of UTGST Act 2017

Section 172 of CGST Act, 2017 Removal of difficulties

Section 170 Rounding off of tax, CGST Act, 2017

Sec 168 of CGST Act, 2017 Power to issue instructions or directions

Section 163 of CGST Act, 2017 Levy of fee

Publication of information in respect of persons in certain cases, Section 159 of CGST Act, 2017

Section 156 Persons deemed to be public servants, CGST Act, 2017

Power to collect statistics, Section 151 of CGST Act, 2017

Goods and services tax compliance rating, Sec 149 of CGST Act, 2017