What is the 750 limit for RCM?

Understanding India’s Revised RCM Regulations and the INR 750 Limit

India’s Goods and Services Tax (GST) regime recently underwent revisions, effective July 18, 2022, which significantly impacted the Reverse Charge Mechanism (RCM) regulations. This article aims to clarify the revised norms and the implications of the INR 750 limit.

Elimination of Exemption

Prior to the revisions, exemptions were provided under RCM for single consignments valued at INR 1,500 or less and single consignees valued at INR 750 or less. However, these exemptions have now been eliminated, meaning that all shipments, regardless of their value, are subject to RCM.

Implications of the INR 750 Limit

The revised regulations stipulated that the INR 750 limit applies to each subsequent shipment, even if the total value of the shipments for a single consignee exceeds this amount. This change effectively ensures that all consignments, regardless of their size, are covered under RCM.

Impact on Businesses

The removal of the INR 750 exemption has implications for both suppliers and recipients of goods:

• Suppliers: Suppliers are now required to pay GST under RCM for all shipments, regardless of their value. This can increase their tax liability and administrative burden.
• Recipients: Recipients of goods will be responsible for paying GST under RCM if they do not have a Goods and Services Tax Identification Number (GSTIN). They may also face additional documentation and compliance requirements.

Compliance Measures

To ensure compliance with the revised RCM regulations, businesses should take the following steps:

• Register for a GSTIN if they do not have one.
• Keep accurate records of all shipments.
• Calculate and pay GST on all taxable shipments under RCM.

Compliance with the revised RCM regulations is crucial to avoid penalties and legal consequences. Businesses should familiarize themselves with the new norms and seek professional advice if necessary.