Definition of Reverse Charge :
As per Section 2(98) of the CGST Act “reverse charge” means the liability to paytax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act.
As per the Provisions of Section 9(3) of the CGST Act and Section 5(3) of the IGST Act, the Central or State Government can specify categories of supply of goods or services or both on which tax shall be paid on Reverse Charge basis. Further Section 9(4) of the CGST Act has a provision that any supply of goods and or services by an unregistered supplier to a registered supplier, the tax thereon shall be paid by the registered recipient.
Thus, criteria for Reverse Charge is twofold –
(a) Specified categories of supplies of goods and services.
(b) Purchase of goods and / or services from Unregistered suppliers.