REVERSE CHARGE MECHANISM (RCM) ON SECURITY SERVICES w.e.f. 1st January, 2019
RCM is one of the method to collect indirect taxes by the Government, under which a recipient (i.e. Buyer) who procures goods or services is required pay the taxes directly to tax authorities.
As per Notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017, the Central Government on the recommendations of the Council notified certain categories of supply of services on which central tax shall be paid on reverse charge basis by the recipient of the services w.e.f. 1st day of July, 2017.
While exercising the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017, the Central Government, on the recommendations of the Council, made amendment in the Notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017 vide Notification No. 29/2018- Central Tax (Rate) dated 31st December, 2018 brought RCM on Security Services provided to a registered person by any person other than a body corporate w.e.f 1st day of January, 2019. e.g.
However these provisions will not 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; (TDS Purpose) or
(ii) a registered person paying tax under section 10. (Composition Dealer)