GST Payable on Reverse charge mechanism basis (RCM) on specified goods and services

GST is collected and paid by the Seller who is registered under CGST Act if tax is applicable unless GST is payable by the recipient of goods and services on reverse charge mechanism basis as per the provisions of Section 9(3) of CGST Act / SGST (UTGST) Act , 2017/ Section 5(3) of IGST Act, 2017 .

RCM on Services

Sl.

No.

Category of Supply of Services Supplier

of service

Recipient of Service
(1) (2) (3) (4)
1 Supply of Services by a goods transport agency (GTA) who has not paid central tax at the rate of 6% in respect of transportation of goods by road to-

(a) any factory registered under or governed by the Factories Act, 1948(63 of 1948);or

(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or

(c) any co-operative society established by or under any law; or

(d) any person registered under the

Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or

(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; or

(g) any casual taxable person.

Provided that nothing contained in this entry shall apply to services provided by a goods transport agency, by way of transport of goods in a goods carriage by road, to, – (a) a Department or Establishment of the Central Government or State Government or Union territory; or (b) local authority; or (c) Governmental agencies, which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services

Goods Transport Agency (GTA) (a) Any factory registered under or governed by the Factories Act, 1948(63 of 1948); or

(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or

(c) any co-operative society established by or under any law; or

(d) any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State

Goods and Services Tax Act or the

Union Territory Goods and Services Tax Act; or

(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; or

(g) any casual taxable person; located in the taxable territory.

2 Services supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services,

to a business entity.

An individual advocate including a senior advocate or firm of advocates. Any business entity located in the taxable territory.
3 Services supplied by an arbitral tribunal to a business entity. An arbitral tribunal. Any business entity located in the

taxable territory.

4 Services provided by way of sponsorship to any body corporate or partnership firm. Any person Any body corporate or partnership firm located in the taxable territory.
5 Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding, –

(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 Central Government, State Government or Union territory or local authority;

(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.

Central Government,State Government,Union territory or local authority Any business entity located in the taxable territory.
5A Services supplied by the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a person registered under the Central Goods and Services Tax Act, 2017 (12 of 2017). Central Government, State Government, Union territory or local authority Any person registered under the Central Goods and Services Tax Act, 2017.
5B Services supplied by any person by way of transfer of development rights or Floor Space Index (FSI) (including additional FSI) for construction of a project by a promoter Any Person Promoter
5C Long term lease of land (30 years or more) by any person against consideration in the form of upfront amount (called as premium, salami, cost, price, development charges or by any other name) and/or periodic rent for construction of a project by a promoter. Any Person Promoter
6 Services supplied 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 The company or a body corporate located in the taxable territory
7 Services supplied by an insurance agent to any person carrying on insurance business. An insurance agent Any person carrying on insurance business, located in the taxable territory.
8 Services supplied by a recovery agent to a banking company or a financial institution or a non- banking financial company. A

recovery agent

A banking company or a financial institution or a non-banking financial company, located in the taxable

territory.

9 Supply of services by an author, music composer, photographer, artist or the like by way of 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 to a publisher, music company, producer or the like.

Author or music composer, photograp her, artist, or the like Publisher, music company, producer or the like, located in the taxable territory.
10 Supply of services by the members of Overseeing Committee to Reserve Bank of India Members of Overseeing Committee constituted by the Reserve Bank of India Reserve Bank of India.
11 Services supplied by individual Direct Selling Agents (DSAs) other than a body corporate, partnership or limited liability partnership firm to bank or non-banking financial company (NBFCs) (W.E.F. 27-Jul-18) Individual Direct Selling Agents (DSAs) other than a body corporate, partnership or limited liability partnership firm. A banking company or a non-banking financial company, located in the taxable territory.
12 Services provided by business facilitator (BF) to a banking company Business facilitator (BF) A banking company, located in the taxable territory
13 Services provided by an agent of business correspondent (BC) to business correspondent (BC) An agent of business correspondent (BC) A business correspondent, located in the taxable territory.
14 Security services (services provided by way of supply of security personnel) provided to a registered person: Provided that nothing contained in this entry shall apply to, – (i)(a) a Department or Establishment of the Central Government or State Government or Union territory; or (b) local authority; or (c) Governmental agencies; which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under section 51 of the said Act and not for making a taxable supply of goods or services; or (ii) a registered person paying tax under section 10 of the said Act. Any person other than a body corporate A registered person, located in the taxable territory.

Explanations:

(a)The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification.

(b) “Body Corporate” has the same meaning as assigned to it in clause (11) of section 2 of the Companies Act, 2013.

(c) the business entity located in the taxable territory who is litigant, applicant or petitioner, as the case may be, shall be treated as the person who receives the legal services for the purpose of this notification.

(d) the words and expressions used and not defined in this notification but defined in the Central Goods and Services Tax Act, the Integrated Goods and Services Tax Act, and the Union Territory Goods and Services Tax Act shall have the same meanings as assigned to them in those Acts.

(e) A “Limited Liability Partnership” formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (6 of 2009) shall also be considered as a partnership firm or a firm.

(f) “insurance agent” shall have the same meaning as assigned to it in clause (10) of section 2 of the Insurance Act, 1938 (4 of 1938).

(g) “renting of immovable property” means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property.’.

(h) Provisions of the Notification No. 29/2018- Central Tax (Rate), in so far as they apply to the Central Government and State Governments, shall also apply to the Parliament and State Legislatures

(i) The term “apartment” shall have the same meaning as assigned to it in clause (e) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2017).

(j) the term “promoter” shall have the same meaning as assigned to it in clause (zk) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2017).

(k) the term “project” shall mean a Real Estate Project (REP) or a Residential Real Estate Project (RREP);

(l) “the term “Real Estate Project (REP)” shall have the same meaning as assigned to it in in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016).

(m) The term “Residential Real Estate Project (RREP)” shall mean a REP in which the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the REP.

(n) “floor space index (FSI)” shall mean the ratio of a building’s total floor area (gross floor area) to the size of the piece of land upon which it is built.”

RCM is applicable from the dates mentioned hereunder

Sl. No. Applicable from
1,2,3,4,5,6,7,8,9 01-Jul-2017
10 13-Oct-2017
5A 25-Jan-2018
11 27-Jul-2018
12,13,14 01-Jan-2019
5B, 5C 01-Apr-2019

RCM on Goods

S.No. Description of supply of Goods Supplier of Goods Recipient of supply
1 Cashew nuts, not shelled or peeled Agriculturist Any registered person
2 Bidi wrapper leaves
(tendu)
Agriculturist Any registered person
3 Tobacco Leaves Agriculturist Any registered person
4 Silk yarn Agriculturist Any person who manufactures silk yarn from raw silk / silk worm cocoons for supply of silk yarn
5 Supply of lottery State Government,
Union Territory or
any local authority
Lottery distributor or selling agent
6 Used vehicles, seized and confiscated goods, old and used goods, waste and scrap Central Government,
State Government, Union territory or a local authority
Any registered person
7 Raw cotton Agriculturist Any registered person
8 Priority Sector Lending
Certificate
Any registered person Any registered person

RCM is applicable from the dates mentioned hereunder

Sl. No. Applicable from
1,2,3,4,5 01-Jul-2017
6 13-Oct-2017
7 15-Nov-2017
8 28-May-2018

The author can be reached at – 8903004623 and E-Mail – saravana.ganesh@hotmail.com

Author Bio

Qualification: CA in Job / Business
Company: CA Saravana Ganesh
Location: Coimbatore, Tamil Nadu, IN
Member Since: 30 Apr 2019 | Total Posts: 1
C.A. with over 23 years of post qualification experience in Finance & Accounts / Strategic Planning / Taxation – Income Tax & GST / Investment Administration View Full Profile

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8 Comments

  1. ASHOK GUPTA says:

    AA SAREE TRADERS HAS OPTED FOR COMPOSITION.PURCHASED IN JAN.,19 TO MAR.,19 SAREES FROM UNREGISTERED BUNKAR. WILL THE SAREE TRADERS BE LIABLE TO PAY GST ON SAREES THROUGH RCM.

    1. saravana.ganesh@hotmail.com says:

      No. Please note that Section 9(4) of CGST Act has been amended with effect from 01-02-2019. Based on the recommendations of the council, Govt may notify specified class of registered persons who shall in respect supply of specified categories of goods or services or both from unregistered supplier, pay tax on RCM basis.
      Once specified class of registered persons and specified categories of goods or services are notified RCM is payable.

  2. Vidyadhar says:

    Will a Co -Op Housing Society will fall under the definition of “Any business entity located in the taxable territory” they are availing legal services from Advocates & Solicitors

  3. AKASH says:

    nice observation sir,
    sir, I have one small doubt regarding RCM. if RCM supply done by the compostion dealer then composition dealer issue bill of supply or tax invoice for such supply?

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