Explain the Reverse Charge Mechanism

Till now we have known that the supplier of the goods pays the taxes. But, in the case of a reverse charge mechanism, the receiver pays the taxes. The structure gets reversed.

The ultimate purpose of transferring the onus of paying taxes to the recipient is, to broaden the scope of taxation for several disorganized entities, to exempt some specific sections of suppliers, and lastly to make the import services taxed as the suppliers are from outside of India.

Currently, only some specific categories of business entities are subject to the reverse charge mechanism. Keep reading to know more about the topic.

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