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CA Intermediate · Taxation · Charge of GST

Anand Constructions, a registered person, procures cement from an unregistered supplier in the same State. Total purchases in a day are Rs 4,00,000. Under the CGST Act as amended up to 30.04.2026, which statement is correct about the liability to pay tax on this procurement of goods?

No reverse charge arises. Under section 9(4) of the CGST Act, as amended, reverse charge on supplies from unregistered persons applies only to notified classes of goods or services. Cement is not notified, so Anand pays no tax under reverse charge, and the old Rs 5,000 daily limit no longer applies.

  1. AThe recipient must pay tax under reverse charge on goods bought from an unregistered supplier, as a general rule, whatever the value
  2. BReverse charge on goods from unregistered suppliers applies only if notified; there is no general reverse charge on such goods, so no tax is payable by Anand under reverse charge on cementCorrect
  3. CAnand must pay tax under reverse charge since the day's purchases exceed Rs 5,000
  4. DAnand must pay tax under reverse charge since the day's purchases exceed Rs 2,500

Explanation

The general reverse charge on procurement from unregistered suppliers under section 9(4) now applies only to notified classes of goods or services or both. Cement is not so notified, so there is no reverse charge. The old Rs 5,000 per day threshold is no longer the operative rule, and the Rs 2,500 figure is unrelated.

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