Question 35:

A Publisher booked royalty for the period from April 2017 to March 2018 on 31st March 2018 payable to Associated Enterprises located outside India. Royalty yet to be paid and Associated Enterprises does not raise any bill for same.

Is GST payable on royalty under reverse charge , for the period upto June 2017.

Does it make any difference if Company makes provision for royalty for period upto June 2017, on 30th June 2017
 

Answer 

The provision of Section 31 apply for issue of invoice and Time of Supply. The liability to pay tax will not be affected even if the invoice is not issued. So the liability to pay tax under Reverse Charge will not be affected even if the supplier has not issued invoice. Please also note that in case of Reverse Charge for payment of tax the receiver is supposed to issue invoice as per section 31(3)(f).

The GST is payable only for the period related to 1 July 2017 onwards, if the amount of royalty is separately mentioned for the period of April to June (Pre GST regime) and July to March (Post GST regime). But if the royalty is paid for the full year at the end of the year then GST will be charged on the total value because the supply is completed on 31 March 2018.

If the royalty is divided into two parts then pre GST part will be treated as per applicable Service Tax Law and post GST will be as per GST Law.  (reply dt. 05 /01/2018)