List of Services liable for Reverse Charge Mechanism (RCM) in GST including notified services effective from 1st October, 2019.

In the normal course of taxability in GST liability to pay GST is on supplier on supply of Goods or services but in some cases recipient of goods or services are liable to pay GST.

The concept of reverse charge under GST is similar to the reverse charges liability in previous service tax law but in GST it is little bit different. In GST there are two type of reverse charge liability viz.:-

  1. Reverse Charge Mechanism Under section 9(3) of CGST/SGST Act: –it is similar to reverse charge liability in previous service tax law. Under this section notified supply of goods and services are covered in which specified recipient are liable to pay tax under reverse charge mechanism.
  2. Reverse Charge Mechanism Under Section 9(4) of CGST/SGST Act :- under this section only registered person under GST act are liable to pay GST under reverse charge mechanism on all taxable goods or services or both receipt from the unregistered supplier.

The Central Government on the recommendations of the Council by Notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017 notify following services which are liable for Reverse Charge Mechanism (RCM) under section 9(3) of CGST Act.

A. List of Services on Which Tax is Payable under RCM (Section 9(3) of CGST Act, 2017)

Table

Sr. No. Category of Supply of Services Effective Date Period Supplier of Service Recipient of service
(1) (2) (3) (4)
1. GTA Services

Supply of Services by a Goods Transport Agency (GTA) who has not paid central tax @ 6% in respect of transportation of goods by road to –

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

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

(c) any cooperative society established by or under any law; or

(d) any person registered under CGST/IGST/ SGST/or UTGST Act; or

(e) anybody 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.

“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.”

01.07.2017 Goods Transport Agency (GTA) (a) any factory registered under or governed by the Factories Act, 1948; or

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

(c) any cooperative society established by or under any law;

(d) any person registered under CGST/IGST/
SGST/UTGST Act; or(e) anybody 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. Legal Services-

Services provide by an individual advocate including a senior advocate or firm of advocates by way of legal services, directly or indirectly.

Explanation. – ‘Legal service’ means any service provided in relation to advice, consultancy or assistance in any manner and includes representational services before any Court, Tribunal or Authority.

01.07.2017 An individual advocate including a senior advocate or firm of advocates. Any business entity located in the taxable territory.

 

 

 

3 Arbitral Services   

Services supplied by an arbitral Tribunal to a business entity.

01.07.2017 An arbitral Tribunal Any business entity located in the taxable territory.
4 Sponsorship Services

Service provided by way of Sponsorship Service to anybody corporate or partnership firm.

01.07.2017 Any person Anybody corporate or partnership firm located in the taxable territory.
5 Government Services

Services supplied by the Central Government, State Government, Union territory or local
authority to a business entity excluding the following :

(A) renting of immovable property service, and

(B) services specified below :-

(i) services by the Department of posts by way of speed post, life insurance, express parcel post 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.

01.07.2017 Central Government, State Government, Union territory or Local Authority Any Business Entity located in the taxable territory.
5A Services by the Government:

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 (with effect from 25-1-2018.

25.01.2018 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. 01.04.2019 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. 01.04.2019 Any person Promoter
6 Services by the Director: Services supplied by a director of a company or a body corporate to the said company or the body corporate. 01.07.2017 A director of a company or a body corporate A company or a body corporate located in the taxable territory
7 Insurance Agent Service: Services provided by an insurance agent to person carrying on insurance business. 01.07.2017 An Insurance Agent Any person carrying on insurance business, located in the taxable territory.
8 Recovery Agent Service: Services provided by a recovery agent to a banking company or a financial institution or a non-banking financial company. 01.07.2017 A Recovery Agent Banking company or financial institution or a non-banking financial company, located in the taxable territory.
9 Copyright Service –

Supply of Services by an author, music or the like by way of transfer or permitting the use or enjoyment of a copyright of a 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.

01.07.2017 to 30.09.2019 Author or music composer, photographer, artist, or the like. Publisher, Music company, producer or the like, located in the taxable territory.
9 Copyright Service by a music composer, photographer, artist or the like  

 

Supply of services by a 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 dramatic, musical or artistic works to a music company, producer or the like.

01.10.2019 Music composer, photographer, artist, or the like Music company, producer or the like, located in the taxable territory. ”;
“9A Copyright Service by Author – w.e.f. 1st October 2019

Supply of services by an
author 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 works to a publisher.

01.10.2019 Author Publisher located in
the taxable territory:Provided that nothing contained in this entry shall apply where, -(i) the author has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017), and filed a declaration, in the form at Annexure I, within the time limit prescribed therein,
with the jurisdictional CGST or SGST commissioner, as the case may be, that he exercises the option to pay central tax on the service specified in column (2), under forward charge in accordance with Section 9 (1) of the Central Goods and Service Tax Act, 2017 under forward charge, and to comply with all the provisions of Central Goods and Service Tax Act, 2017 (12 of 2017) as they apply to a person liable for paying the tax in relation to the supply of any goods or
services or both and that he shall not withdraw the said
option within a period of 1 year from the date of exercising such option;(ii) the author makes a declaration, as prescribed in Annexure II on the invoice issued by him in Form GST Inv-I to the publisher. ”;
10 Reserve Bank Services : w.e.f 13th October, 2017

Supply of services by the members of Overseeing Committee to (Reserve Bank of India Effective from 13-10-2017)

13.10.2017 Members of Overseeing Committee constituted by the Reserve Bank of India. Reserve Bank of India
11 Services by DSAs :

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) Effective from 27-7-2018).

27.07.2018 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.

01.01.2019 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). 01.01.2019 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 the 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) Government 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.

01.01.2019 Any person other than a body corporate. A registered person, located in the “taxable territory.”
15 Services provided by way of renting of a motor vehicle provided to a body corporate. 01.10.2019 Any person other than a body corporate, paying central tax at the rate of 2.5% on renting of motor
vehicles with input tax credit only of input service in the same line of business
Any body corporate located in the taxable territory.
16 Services of lending of securities under Securities Lending Scheme, 1997
(“Scheme”) of Securities and Exchange Board of India
(“SEBI”), as amended.
01.10.2019 Lender i.e. a person who deposits the securities registered in his name or in the name of any other person duly authorised on his behalf with an approved intermediary for the purpose of lending under the Scheme of SEBI Borrower i.e. a person who borrows the securities under the Scheme through an approved intermediary of
SEBI.

B. Table for Section 9(4) as per Notification No.7/2019 Central Tax (Rate) with effect from 01-04-2019

Table

Sl. No. Category of supply of goods and services Recipient
of goods
and
services
(1) (2) (3)
1 With effect from 01.04.2019

Supply of such goods and services or both [other than services by way of grant of development rights, long term lease of land (against upfront payment in the form of premium, salami, development charges etc.) or FSI (including additional FSI)] which constitute the shortfall from the minimum value of goods or services or both required to be purchased by a promoter for construction of project, in a financial year (or part of the financial year till the date of issuance of completion certificate or first occupation, whichever is earlier) as prescribed in notification No. 11/ 2017-Central Tax (Rate), dated 28th June, 2017, at items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, published in Gazette of India vide G.S.R. No. 690, dated 28th June, 2017, as amended.

Promoter.
2

 

 

 

 

 

 

With effect from 01.04.2019 to 30.09.2019

Cement falling in chapter heading 2523 in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) which constitute the shortfall from the minimum value of goods or services or both required to be purchased by a promoter for construction of project, in a financial year (or part of the financial year till the date of issuance of completion certificate or first occupation, whichever is earlier) as prescribed in notification No. 11/2017- Central Tax (Rate), dated 28th June, 2017, at items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, published in Gazette of India vide G.S.R. No. 690, dated 28th June, 2017, as amended.

Promoter.

 

 

 

 

 

2. With Effect from 01.10.2019

inserted vide  Notification No.24/2019 Central Tax (Rate) dated 30.09.2019

Cement falling in chapter heading 2523 in the first schedule to the Customs Tariff Act, 1975 (51 of 1975).

3. With effect from 01.04.2019

Capital goods falling under any chapter in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) supplied to a promoter for construction of a project on which tax is payable or paid at the rate prescribed for items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, in notification No. 11/2017- Central Tax (Rate), dated 28th June, 2017, published in Gazette of India vide G.S.R. No. 690, dated 28th June, 2017, as amended.

Promoter

Explanation.—For the purpose of this notification,—

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

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

(iii) 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);

(iv) “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.

(v) the term “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.

C. List of Specified Services u/s 9(5) of CGST Act and u/s 5 (5) of IGST Act on which GST is payable under RCM by Electronic Commerce Operator

In respect of specified services, tax shall be paid by the ECO on behalf of the service suppliers if such services are supplied through it and all the provisions of the Act shall apply to such ECO as if he is the supplier liable to pay tax in relation to the supply of such services. The Government has notified following categories of services, the tax on intra-State/ inter-state supplies shall be paid by the ECO –

 S. No. Description of supply of Service  Supplier of service Person Liable to Pay GST Notification No.
 1 Transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle Any person E-commerce operator Notification No. 17/2017-Central Tax (Rate) dt 28th June, 2017 Corresponding IGST Notification No. 14/2017-Integrated Tax (Rate) dt 28th June, 2017
 2 Providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes Any person except who is liable for registration under sub-section (1) of section 22 of the said CGST Act E-commerce operator –do–
 3 Services by way of house-keeping, such as plumbing, carpentering etc Any person except who is liable for registration under sub-section (1) of section 22 of the said CGST Act E-commerce operator Inserted vide Notification No. 23/2017-Central Tax(Rate) dated 22nd Aug, 2017 Corresponding Notification No. 23/2017-Integrated Tax (Rate) dated 22nd Aug, 2017

Furthermore, above mentioned suppliers of services covered u/s 9(5) are exempted from compulsory registration and can take benefit of threshold limit.

D. List of Notifications issued from time to time related to RCM

S. No. Notification No. and date with link
A. List of Notifications issued from time to time related to RCM U/s. 9(3)
1 Notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017
2 Notification No. 22/2017 – Central Tax (Rate) dated 22nd August, 2017
3 Notification No. 33/2017 – Central Tax (Rate), dated 13th October, 2017
4 Notification No. 3/2018 – Central Tax (Rate), dated 25th January, 2018
5 Notification No. 15/2018 – Central Tax (Rate), dated 26th July, 2018
6 Notification No.29/ 2018- Central Tax (Rate), dated 31st December, 2018
7 Notification No. 5/2019 – Central Tax (Rate), dated 29th March, 2019
8 Notification No. 22/2019- Central Tax (Rate) Dated 30th September, 2019
B. List of Notifications issued from time to time related to RCM U/s. 9(4)
1. Notification No. 07/2019-Central Tax (Rate) dated 29th March, 2019
2. Notification No.24/2019 Central Tax (Rate) dated 30.09.2019
C. List of Notifications issued from time to time related to RCM U/s. 9(5)
1. Notification No. 17/2017-Central Tax (Rate) dt 28th June, 2017
2. Notification No. 23/2017-Central Tax(Rate) dated 22nd Aug, 2017

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11 Comments

    1. FCA GAJENDRA KUMAR JAIN says:

      Legal service’ means any service provided in relation to advice, consultancy or assistance in any manner and includes representational services before any Court, Tribunal or Authority.

  1. Dilip Patwa says:

    RCM u/s 9(4) ” The Government may, on the recommendations of the council, by notification, specify a class of registered persons who shall, in respect of supply of supply of specified categories of goods and services or both received from an unregistered supplier,pay the tax on reverce charge basis …” means not all but only specified class of registered persons and specified categories of goods or services are liable to RCM, and not all registered persons.

  2. KARAMJEET SINGH CHAGGAR says:

    I am practicing chartered accountant , it is very helpful that we get latest amendment from end , thank you very much.

  3. KARAMJEET SINGH CHAGGAR says:

    I am practicing chartered accountant , it is very helpful that we get latest amendment from end , thank you very much.

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