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CS Executive · Tax Laws and Practice · Levy and Collection of GST

Sharma Enterprises is unregistered and supplies a service under a category notified for reverse charge. What does section 32 of the CGST Act, 2017 say about its collecting GST from the recipient?

Sharma Enterprises must not collect any amount as GST. Section 32(1) of the CGST Act prohibits a non-registered person from collecting tax on any supply, and under reverse charge the recipient pays the tax. The recipient's consent or invoice timing does not change this prohibition.

  1. AIt may collect tax if the invoice is issued within 30 days
  2. BIt may collect tax if the recipient agrees
  3. CIt must not collect any amount by way of tax, since a person who is not registered cannot collect taxCorrect
  4. DIt may collect tax at half the normal rate

Explanation

Section 32(1) prohibits a person who is not a registered person from collecting any amount by way of tax on any supply. Under reverse charge the recipient pays the tax directly, so the unregistered supplier collects nothing as tax. Recipient consent does not override the prohibition.

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