The reverse charge mechanism (RCM) has always been an important concept in GST Law. Today in this article, we will discuss when to raise Invoice and when tax liability arises in RCM for service transactions.

We need to study the Time of Supply and Tax Invoice Provisions of the GST Law to get an answer to this question.

Services taken from an Unregistered Taxpayer and RCM is applicable

Who will issue the Invoice?

Recipient in the Form of Self-Invoice

When to issue a Self Invoice/Tax Invoice

• When the Supplier is an unregistered taxpayer and RCM is applicable, the recipient is required to issue a self-invoice as per the GST Law.
• The said invoice has to be issued within a period of thirty days from the date of receipt of the supply of goods or services, or both.

Services: Point of Taxation

• Date of payment
• Date of Self-Invoice

Whichever is earlier.

When to make the payment of Tax under RCM

Payment will be made as per due date falling in next month

• For Monthly Taxpayers, due date is 20th of next month
• For those who opted for the QRMP scheme, the due date will be 25th of Next month for First 2 months of the quarter and 22nd/24th for the last month of the Quarter.

Services taken from a Registered Taxpayer and RCM is applicable

Who will issue the Invoice?

In this case, the supplier will issue a tax invoice.

When to issue Self Invoice/Tax Invoice

• The said invoice has to be issued within thirty days from the date of supply of services.

Services: Point of Taxation

• Date of payment
• Date of Invoice

Whichever is earlier.

When to make the payment of Tax under RCM

Payment will be made as per due date falling in next month

• For Monthly Taxpayers, due date is 20th of next month
• For those who opted for the QRMP scheme, the due date will be 25th of Next month for First 2 months of the quarter and 22nd/24th for the last month of the quarter.

Section 31. Tax invoice [Relevant Text]

31(3)(f) a registered person who is liable to pay tax under sub-section (3) or subsection (4) of section 9 shall, within the period as may be prescribed, issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both;

Rule 47A. Time limit for issuing tax invoice in cases where recipient is required to issue invoice.-

Notwithstanding anything contained in rule 47, where an invoice referred to in rule 46 is required to be issued under clause (f) of sub-section (3) of section 31 by a registered person, who is liable to pay tax under sub-section (3) or sub-section (4) of section 9, he shall issue the said invoice within a period of thirty days from the date of receipt of the said supply of goods or services, or both, as the case may be.

Section 13. Time of Supply of Services [Relevant Text when Supplier is not an associated enterprise outside India]

13(3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earlier of the following dates, namely:-

(a) the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or

(b) the date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier, in cases where invoice is required to be issued by the supplier; or:

(c) the date of issue of invoice by the recipient, in cases where invoice is to be issued by the recipient:

Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the books of account of the recipient of supply: