This post describes the list of services under Reverse Charge Mechanism (RCM) . In the discussion below the points from 1 to 19 are as per section 9(3) of Central Goods and Service Tax Act, 2017 (CGST Act, 2017). Points 20 and 21 relates to the provisions of Integrated Goods and Service Tax Act, 2017 (IGST Act, 2017) . This is the complete and updated list as on March 2020.
In all the below mentioned cases the liability of tax arises on the recipient of service and hence the tax is payable by him. For the easy reference of the readers clickable list items are created below.
Transportation of Goods by road to –
Goods Transport Agency who has not paid CGST, SGST or IGST for the said service
Note: At times situation confuses in determining the recipient of service (the sender of goods or receiver of goods). Here the person who makes the payment to the Goods Transporter is generally considered as the recipient and tax liability is borne by him.
Individual advocate or firm of advocate provides legal services. These legal services are taxable supplies taxed under RCM (Reverse Charge Mechanism). These legal services include legal advice, legal consultancy, legal assistance, representational service before any court/ tribunal etc.
Individual Advocates or firm of advocates supply these services.
Any business entity located in the taxable territory of India receives these services.
Any service provided by an arbitral or tribunal is considered under RCM (Reverse Charge Mechanism)
Arbitral or Tribunal provides any service.
Any business entity located in the taxable territory.
The supplier provides Sponsorship service is this case.
Any person may provide the sponsorship service
Any Body Corporate or partnership firm located in taxable territory of India receives the supply
Reverse Charge Mechanism (RCM) applies to any service provided by the government excluding the following services
Government – Central Government/ State Government/ Union Territories / any local authority supplies such services
Any Business Entity in the taxable territory receives such services
Renting of Immovable property is the service provided by the supplier.
Government – Central Government/ State Government/ Union Territories / any local authority supplies such services
The service is received by any person registered under the CGST Act 2017(Central Goods and Service Tax Act, 2017)
The provider of service provides the service in form of transfer of development rights or floor space index
Any person may be the supplier who provides the development rights or floor space index for any activity.
Promoter undertaking the task after receiving such development right or floor space index is the recipient of service.
The director provides service to a company where he has assumed directorship. Reverse Charge Mechanism is applied on such services. However if the director provides any service to the company while being in employer-employee relationship with the said company, then taxability under Goods and Service Tax Act 2017 does not arise.
Director is the supplier or service.
The company or any Body Corporate where he has assumed directorship is the recipient of service and is thus liable to discharge tax.
The insurance agent provides service to a person carrying insurance business
Definitely the insurance agent is the supplier of service.
The person located in taxable territory, carrying insurance business and getting service from the insurance agent is the receiver/ recipient or service.
A recovery agent supplies services to the banking company or financial institution or non banking financial company.
The recovery agent supplies the service.
The banking company, Non-banking Financial Institutions or any other financial institution receives the service.
Music Composers, photographers and artists may transfer or permit the use of the copyright present in their name under the Copyright Act, 1957 relating to their artistic work to Music Company, producer, etc.
The Music Composer, photographer or artist who transfer or permits the use of copyright is the supplier.
Music Company, producers etc who make use of the copyright privilege are recipient of service.
An author may transfer or permit the use of the copyright present in their name under the Copyright Act, 1957 relating to original literary work to any publisher.
The author who transfer or permits the use of his literary work is the supplier.
The publisher who uses the literary work of the author is the recipient of service.
Any service provided by the member of the Overseeing Committee.
In such cases the Overseeing Committee members are supplier for the purpose of taxation.
RBI (Reserve Bank of India) is the recipient of service.
Services provided by individual Direct Selling Agents (DSAs) to any banking or Non Banking Financial Company (NBFC).
The individual Direct Selling Agents (DSAs) are supplier in this case. It is to be noted that these DSAs shall not be any Body Corporate or partnership firm in order to come under the ambit of Reverse Charge Mechanism.
The Banks or Non Banking Financial Company (NBFCs) is recipient for the above service provided they are located in taxable territory.
The Business Facilitator provides Business Facilitation service.
Business facilitator is the supplier.
A banking company located in the taxable territory is the recipient of service.
An agent of Business Correspondent provides services to the Business Correspondent (BC)
The agent of Business Correspondent is the provider/ supplier of service.
A Business Correspondent in taxable territory availing the services from the agent is the recipient.
Security service is provision of service by the way of supply of security personnel to registered personnel. However the concept of RCM (Reverse Charge Mechanism) does not apply to the following persons:
a)The Department of Establishment of Central or State Government, local authority or government agencies who are registered merely for deduction of TDS u/s 51 but are not the provider of services.
b) Any person, providing the service, who is registered under Composition Scheme in section 10 of the CGST, 2017(Central Goods and Service Tax Act, 2017).
The person providing the security personnel is provider of service. The provider should not be a Body Corporate for the applicability of RCM (Reverse Charge Mechanism).
Any registered person in the taxable territory can be a recipient of security services.
This service includes renting of motor vehicle to Any Body corporate by a person who is paying tax and eligible to avail Input Tax Credit.
Any person who rents motor vehicle to Any Body corporate and is eligible to avail Input Tax Credit can be the provider of service.
Any Body Corporate located in taxable territory of India can be the receiver of service.
The Service of lending of securities under Securities Lending Scheme, 1997 of SEBI (Security Exchange Board of India) is taxable under RCM (Reverse Charge Mechanism).
The lender of securities is the supplier of service. To be more specific the lender deposits the securities which he/she holds with a intermediary for the purpose of lending under the Securities Lending Scheme, 1997 of SEBI (Security Exchange Board of India).
The Borrower of security is the recipient. Borrower is the person who borrows the money under the Securities Lending Scheme, 1997 of SEBI (Security Exchange Board of India).
A person outside the taxable territory provides any service to any person located in taxable territory of India. Such type of services falls under the concept of Reverse Charge Mechanism (RCM).
A person outside the taxable territory of India is the supplier of service.
Any person located in taxable territory of India excluding the non taxable online recipient is the recipient of service.
This service includes service provided by the way of transportation of goods by vessel outside India up to customs station.
Any person located in nontaxable territory is the supplier.
The Importer of Goods as defined in the Customs Act, 1962 is the recipient of service.
Also learn about the concept of valuation in GST.
Many of you who are presently reading this post may have already stumbled upon your…
इंग्लिश मे ई चालान के बारे पढे/Read in English 1) ई-चालान का परिचय? Introducing E-Invoice?…
Topics 1.Introduction to GST in Garment industry …
Topics 1.Importance of indirect tax or the Goods and Service Tax in food sector for…
Audit in GST is a very vast topic. However for the purpose of quick applicability…