Anshul Kumat

Anshul Kumat

The fitment of rates of services were discussed on 19th May 2017 during the 14th GST Council meeting held at Srinagar, Jammu & Kashmir. The Council has broadly approved the GST rates for services at Nil, 5%, 12%, 18% and 28%. The information will be subject to further vetting after which the list may undergo some changes. The decisions of the GST Council are being communicated for general information and will be given effect to through gazette notifications which shall have force of law.

Reverse Charge

Analysis on the list with some questions

  • “Clerical mistake or Intentional omission?”

> Services are numbered from 1 to 18 but serial No. 7 and 12-16 are missing.

> At the top of list, the word used for GST is Service Tax.

  • Full GST on all the services covered under the list are payable by Service Receiver (100%) unlike service tax where there was a provision for partial reverse charge

The Article covers:-

  • Services not covered under RCM in GST (but earlier covered by Service Tax)
  • Services introduced by GST under RCM
  • Services under RCM with some changes

Services not covered under RCM in GST (but earlier covered by Service Tax)

1) (a) in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on abated value to any person who is not engaged in the similar line of business by individual, HUF, firm or AOP to Body Corporate

(b) in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on non abated value to any person who is not engaged in the similar line of business by individual, HUF, firm or AOP to Body Corporate (Revised wef 01.10.2014)

2) in respect of services provided or agreed to be provided by way of supply of manpower for any purpose or security services by individual, HUF, firm or AOP to Body Corporate

3) in respect of services provided or agreed to be provided in service portion in execution of works contract by individual, HUF, firm or AOP to Body Corporate

1. In case of Original work

2. In all other cases

Services introduced by GST under RCM

Sr. No Service Provider of Service Percentage of GST payable by service provider Recipient of service Percentage of GST payable by any person other than service provider
1

 

Services by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India A person located in non-taxable territory to a person located in non-taxable territory Nil Importer as defined under clause (26) of section 2 of the Customs Act 1962 100%
2 Transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works Author or music composer, photographer, artist, etc Nil Publisher, Music company, Producer 100%
3 Radio taxi or Passenger Transport Services provided through electronic commerce operator Taxi driver or Rent a cab operator Nil Any person 100% by Electronic Commerce Operator

Services under RCM with some changes (Changes Highlighted In Red)

Sr. No
Service
Provider of Service
Percentage of service tax/GST payable by service provider
Recipient of service
 
Percentage of service tax payable by person other than service provider
Percentage of GST payable by any person other than service provider
1
Taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory other than non-assessee online recipient (OIDAR)
Any person who is located in a non-taxable territory
Nil
Any person located in the taxable territory other than non-assessee online recipient (Business Recipient),
100%
100%
2
Services provided or agreed to be provided by a goods transport agency (GTA) in respect of transportation of goods by road
Goods Transport Agency (GTA)
Nil
(a) any factory registered under or governed by the Factories Act, 1948;
100%
100%
(b) any society registered under the Societies Registration Act, 1860 or under any other law for the time being in force inany part of India
(c) any co-operative society established by or under any law;
(d) any person registered under CGST/SGST/UTGST Act;
(In old law it was as
any ‘dealer of excisable goods’ who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made there under;)
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including association of persons.
(g) Casual taxable person (In old law it was as any person who pays or is liable to pay freight either himself or through his agent for the transportation of such goods by road in a goods carriage is liable to pay service tax.)
3
Services provided or agreed to be provided by an individual advocate or firm of advocates by way of legal services, directly or indirectly
An individual advocate or firm of advocates
Nil
Any business entity.
100%
100%
4
Services provided or agreed to be provided by an arbitral tribunal
An arbitral tribunal
Nil
Any business entity.
100%
100%
5
Sponsorship services
Any person
Nil
Any body corporate or partnership firm.
100%
100%
6
Services provided or agreed to be provided by Government or local authority excluding:-
Government or local authority
Nil
Any business entity
100%
100%
(1) renting of immovable property, and
(2) services specified below-
(i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government;
(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
(iii) transport of goods or passengers.
7
Services provided or agreed to be provided by a director of a company or a body corporate to the said company or the body corporate;
A director of a company or a body corporate
Nil
A company or a body corporate.
100%
100%
8
Services provided or agreed to be provided by an insurance agent to any person carrying on insurance business
An insurance agent
Nil
Any person carrying on insurance business.
100%
100%
9
Services provided or agreed to be provided by a recovery agent to a banking company or a financial institution or a non-banking financial company
A recovery agent
Nil
A banking company or a financial institution or a non-banking financial company.
100%
100%

(Anshul Kumat, Contact: +91-7597921247, Email: anshul.jsco@gmail.com)

More Under Goods and Services Tax

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Type : Articles (13240) Featured (4136)
Tags : goods and services tax (1927) GST (1511)

9 responses to “Reverse Charge Mechanism (RCM) for Services: What Has Changed??”

  1. AJAY RASTOGI says:

    THERE IS NO INDICATION IN GST LAW THAT THE SERVICES PROVIDED BY A WAY OF UNDER MANPOWER RECRUITMENT SERVICES CATEGORY BY THE INDIVIDUAL IN A ORGANIZATION WILL BE COVERED UNDER REVERSE CHARGES OR NOT , IF THERE TURN OVER EXCEEDS RS. 10.0 LAC OR BELOW THE LIMIT.

  2. JASH says:

    Hi,
    I have an doubt on RCM under GTA. As per Sec 2(62), clearly given that, a recipient is entitle to avail ITC of the tax payable under the provisions of sub-sections (3) and (4) of
    section 9.

    In this regards, As per the schedule given under Service. GST on GTA will be paid by the recipient as RCM @ 5%, but in schedule found “NO ITC” .

    Whether “NO ITC” means, ITC is not for the service provider for his input tax or to the Recipient who pay under RCM

  3. ravi says:

    GST paid under reverse charge , can it be taken as Input

  4. P Aravindhan says:

    What about purchase Services/Goods from unregistered persons ???

    Does it not attract reverse charge ??

  5. mihir says:

    Dear Expert,

    While reading this article, it seems there is no RCM of Rent A Cab service? Kindly reply.

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