What is Normal Charge and Reverse Charge

Last updated at Oct. 29, 2020 by

Who deposits GST to Government?

Seller or Buyer?

Normally seller charges GST on Bill from Buyer and deposits to government. This is called Normal Charge

Sometimes Buyer also deposits GST to government directly and does not pay to Seller. This is called Reverse Charge

Lets understand this with the help of an example

normal and reverse charge.png

In Normal Charge

A sells goods to B of 100000+18000 GST

B Pays him total 118000

A Deposits 18000 GST to Government

So in this case, GST is deposited by Seller A

In Reverse Charge

A sells goods to B of 100000 (without GST()

B Pays him 100000 only

B Deposits 18000 directly to Government

So in this case, GST is deposited by Buyer B

Transcript

Normal Charge Reverse Charge GST is paid by Buyer For whom it is Output and Input GST is paid by Seller For whom it is Output and Input A B Sale/Service Rs 100000 + 18000 GST Cheque 118000 GST Deposit (18000) A B Cheque 100000 GST Deposit (18000) Sale/Service Rs100000 Output Input A B Output Input B B First B Deposits Output , then B Claim Input After Payment

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About the Author

CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 10 years. He also provides Accounts Tax GST Training in Delhi and Pune.