what is reverse charge mechanism?

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Accepted Answer

Reverse charge mechanism is a system where the recipient of the goods or services is liable to pay the tax instead of the supplier.

Under reverse charge mechanism, the recipient of the goods or services is responsible for paying the tax to the government instead of the supplier.
This mechanism is commonly used in B2B transactions where the recipient is a registered business entity.
It helps in preventing tax evasion and ensuring compliance with tax regulations.
Examples include services provided by a foreign company to a domestic company, where the domestic company is required to pay the tax under reverse charge mechanism.

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