There is no GST on unregistered to unregistered transactions

Under Section 24 of CGST Act, 2017, it is compulsory to get registration for:

(iii) Persons who are required to pay tax under reverse charge;

Does it mean every unregistered trader/professional buying goods/ (notified) services from other unregistered trader/professional has to get registration?

If Yes, Almost Everyone will have to apply for Registration and this would be a disaster for unorganized sector, as other than end consumer no-one would buy from them, even not who belongs to their group of small businesses.

Let’s understand Reverse Charge according to CGST Act, 2017 :

Section 9(3) The Government may, on the recommendations of the Council, by notification, Specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

Section 9(4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person* shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

*So, it is clear, Reverse Charge would be applicable only if Supply is made from Unregistered Person to Registered Person. Same has been clarified today by GoI thru its twitter handle :

“There is no GST on unregistered to unregistered transactions.”

But, in this chain, all persons part of such transactions must have valid documents to support their transaction i.e. either Tax Invoice or Bill of Supply. Thanks.