Reverse Charge Mechanism (RCM) under GST on Security, Advocate, Transport & Residential Rent Services
I am explaining here 4 Popular Services on Which GST is payable under Reverse Charge Mechanism (RCM). These services are Security Service, Goods Transport Agency (GTA), Advocate Service and Residential Property Taken on Rent.
LET’S UNDERSTAND IN DETAIL
1. SECURITY SERVICE
From 1st January 2019, Any person paying security services then they must pay RCM
2. TRANSPORT SERVICE / GTA
Possibility -1 GTA is not charging GST in his consignment note /invoice ( LR )
If Transport company (GTA) has not selected to pay under Forward Charge then he will continued to remain in RCM category, and in such case, we will continue discharge RCM as earlier (AS APPLICABLE FROM JULY 2017)
Other VERY IMP CHANGE in RCM for GTA
Earlier, in one vehicle (full load) in one consignment note (LR) for rent up to 1500/- and if there are different consignment notes in one vehicle for rent up to 750/-, it was not necessary to pay RCM.
From 18TH JULY 2022, this exemption has been removed; this means we have to pay RCM for even one rupee.
Possibility – 2 – if GTA is collecting & discharging 5/12%
From 18th July 2022, If GTA is collecting & discharging the GST at 5 %/12% in his consignment note /invoice (LR) under Forward Charge, and then we don’t have to pay RCM.
3. ADVOCATE SERVICE
From JULY,2017, Any person paying TO ADVOCATE then they must pay RCM on his FEES.
4. RESIDENCE PROPERTY TAKEN ON RENT
Ø BEFORE 18-7-2022
POSSIBILITY-1 USE OF PROPERTY is COMMERCIAL-
If owner levies GST (UNDER FCM ) then you have to pay GST to him ( since July 2017)
(for eg Office / Admin office / back office/ Godown/ any commercial use. )
POSSIBILITY-2 USE OF PROPERTY is RESIDENTIAL-
Renting of residential dwelling for use as residence. – EXEMPT
Ø AFTER 18-7-2022 –
RESIDENTIAL PROPERTY TAKEN ON RENT THEN RECIPIENT HAS TO DISCHARGE RCM – THIS IS THE ONE LINE AMENDMENT AFTER 18-7-2022
(AND I AM INTERPRETING AS PER BARE READING ONLY)
LET’S UNDERSTAND SOME UNSAID INTERPRETATION
1. WE DO NOT HAVE TO SEE “USAGE” OR “PURPOSE“ OF RESIDENTIAL PROPERTY
Be it for any usage whether Commercial or residential or anything, It will fall into RCM category. And So Recipient has to discharge RCM after 18-7-2022
FOR EXAMPLE, Residential property taken on rent by RD for Office / Admin office / back office/ Godown/ OR any commercial use. OR
FOR EXAMPLE, Registered dealer like Companies/Partnership Firm / LLP/ Proprietor taking Residential property for use as residence for STAY OF of their employee, staff, guests, visitors, on site engineers, directors, partners, board members etc.
We don’t have to see “USAGE” OR “PURPOSE“, It will fall into RCM category
EXCEPTION-
If it is being used as RESIDENTIAL USE OF PROPRIETOR/ or partner of Firm registered in his Individual capacity and Property used as his RESIDENCE then not required to PAY RCM.
(This is As per PIBFACTCHECK tweet. And this goes in sync with meaning of SUPPLY & FURTHERANCE OF BUSINESS)
2. WE DON’T HAVE TO SEE WHETHER OWNER WAS REGISTERED OR UNREGISTERED OR WE DON’T HAVE TO SEE WHETHER HE WAS DISCHARGING GST OR NOT
Earlier, before 18-7-2022, If the residential property taken on rent but USE OF PROPERTY is COMMERCIAL then owner must have to get himself registered and discharge GST if he has crossed 20 lac limit & So he has to levy GST (UNDER FCM )
But after 18-07-2022, we don’t have to see whether Owner was RD or URD or we don’t have to see whether he was discharging GST or not. It is Recipient who has to discharge RCM always
__________
what about COMMERCIAL PROPERTY taken on RENT-?
NO RCM. If owner levies GST (UNDER FCM) then you have to pay GST to him (since July 2017)
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