Would create compliance and other issues for the registered buyer/ customer to make it further disadvantageous to procure from Unregistered or unknown source, who may be unconscientiously corrupt or intellectually uncomprehending.
It was beneficial to buy non-creditable supplies from unregistered vendor
Now Government has dictated that any supplies by unregistered S to a registered C would require C to pay GST on reverse charge basis.
Now consider impact of reverse charge provision
In case of a supply where GST paid is available as credit to C, the cost to C would remain the same irrespective of whether he purchases from a registered S or an unregistered S. However, C would desist buying from an unregistered S as it would increase his pain of making all compliance of tax determination, payment and recording.
Many companies are now asking their vendors to register with the GSTN and are taking stock of their existing vendor list to weed out unregistered vendors
For every purchase from an unregistered vendor, the registered customer would be required to follow below mentioned steps:
Unregistered dealer as a concept is not new to Indian taxes but tax on reverse charge for procurements from an unregistered person is new to all of us. It also means a lot of change in the processes, systems and the costs. Would steering away from unregistered vendors be beneficial to my business is what one must examine in the coming days.
Also , is not procuring from a registered dealer who is not professionally & intelligently geared up to understand and implement such compliances, even more dreadful, as it would require even more paper-work and processes to avoid severe penalties for somebody’s mistakes.