Reverse Charge Mechanism in GST

By CA Satbir Singh

CA Satbir Singh
 Who will pay GST
NORMAL CHARGE REVERSE CHARGE

GST
SUPPLIER OF
SUPPLIER OF
GOODS/SERVICES
GOODS/SERVICES

GOVT GOVT
GOODS /
GOODS /
SERVICES
SERVICES
CONSIDRATION
CONSIDRATION
AND GST

RECEIPIENT OF
GOODS /SERVICES GST
RECEIPIENT OF
GOODS /SERVICES
CA Satbir Singh
 Reverse charge

Sec 2 (98) of CGST Act

“Reverse Charge" means the liability to pay tax by the recipient

of supply of goods or services or both instead of the supplier of
such goods or services or both under sub-section (3) or sub-
section (4) of section 9, or
under sub-section (3) or sub-section (4) of section 5 of the
Integrated Goods and Services Tax Act;

CA Satbir Singh
 Persons Liable to
Pay GST

Forward Charge Reverse Charge

Notified Goods for RCM Liability:

Refer Notification No. 4/2017-Central
u/s 9(4) of CGST and 5(4) of IGST :
Tax (Rate) and Notification 4/2017- U/s 9(3) of CGST/Sec. specified categories of goods or services
Integrated Tax (Rate)both dated 28-6- 5(3) of IGST: on Notified as may be notified received from
2017 Goods and Services unregistered person by specified a class
received by Recipient
Notified Services for RCM Liability: of registered person
Refer Notification No. 13/2017-CT
(Rates) and 10/2017-IT (Rates) both
dated 28-6-2017, effective from 1-7-
2017 Notification No 07/2019
central tax ( Rate)
CA Satbir Singh
Applicability of provisions of Section 9(4) can be summarized
as follow
Supplier Recipient Type of supply in GST Applicability of
RCM under GST
Registered Registered Taxable No
Registered Registered Not Taxable No
Registered Unregistered Taxable No
Registered Unregistered Not Taxable No
Unregistered Unregistered Taxable No

Unregistered Unregistered Not Taxable NO

Unregistered *Registered Taxable Yes

Unregistered Registered Not Taxable No

CA Satbir Singh
CA Satbir Singh
 Import Of Import of
Goods Services

RCM will not RCM Will

Apply Apply

CA Satbir Singh
Composition Taxpayer and RCM under GST
➢ Even the persons who have opted composition scheme in
GST, are liable to pay GST under reverse charge basis if
they are the recipients of notified goods or services from
registered or unregistered supplier.
➢ GST under reverse charge basis has to be paid at
applicable rates and not at the rates applicable to
composition dealer based on turnover (composition
rates).

CA Satbir Singh
Registration under GST for RCM

CA Satbir Singh
Registration under GST for RCM
- If the person is liable to pay GST under RCM, then he has to take
compulsory registration in GST .
- Exemptions are provided from compulsory registration in some
cases e.g if Advocate services provided to Business Entity ,then
Business entity is not required to register if turnover is upto Rs
20 Lakh in preceding Financial year)
- Apart from paying GST on inward supplies liable for RCM, he is
also required to pay GST on all taxable supplies made by him
irrespective of threshold limit.

CA Satbir Singh
Exemption to Supplier from Registration under GST for
RCM
- Person who make supplies liable for RCM is not required
to be registered (Notification No. 5/2017-Central Tax
dated 19-6-2017 w.e.f. 22.06.2017])
Profession Nature of Services Registration
Advocate Legal Services of Rs 25 Not applicable
Lakh
Advocate Legal Services of Rs 25 Needs to Take
Lakh and Renting of registration
Commercial Property Rs
5 lakh
CA Satbir Singh
Registration as Input Service Distributor
W.e.f 01.04.2025

As per the new amendments in Section 2(61) read with Section 20

of CGST Act 2017 , where the assessee receives the input
services including the Reverse Charge Mechanism invoices on
behalf of distinct person i.e. branches will have to get themselves
registered as ISD and distribute the same in the manner prescribed

CA Satbir Singh
Tax Invoice for GST under RCM

CA Satbir Singh
 Tax Invoice for GST under RCM
• Self Invoices : Who will issue the Tax Invoice,
Supplier Recipient Who will issue Invoice
Unregistered Registered Recipient (self Invoice)
Registered Recipient Supplier
• Time Limit for Issue of Invoice :
Period
Time Period for Issue of Invoice
Upto 31.10.2024 Consolidated Invoice can be issued at the end of the Month
the Aggregate value of supply exceeds Rs 5000 in a day from
any or all the suppliers.
From 01.11.2024 Within 30 days from Date of Receipt of Goods or Services.
• New Rule 47A for Self Invoice : Invoice shall be issued within a period of 30 days
from the date of receipt of the said supply of goods or services, or both, as the
case may be [ Rule 47A Inserted by the Central Goods and Services Tax (Second
Amendment) Rules, 2024, w.e.f. 1-11-2024.]
CA Satbir Singh
E-invoicing is applicable for supplies
involving Reverse Charge?

CA Satbir Singh
Whether e-invoicing is applicable for supplies involving Reverse
Charge?
If the invoice issued by notified person is in respect of supplies made by
him but attracting reverse charge under Section 9(3), e-invoicing is
applicable.
For example, a taxpayer (say Goods Transport Agency or a Firm of
Advocates having aggregate turnover in a FY is more than Rs 5 Cr.) is
supplying services to a company (who will be discharging tax liability as
recipient under RCM), such invoices have to be reported by the notified
person to IRP.

CA Satbir Singh
Time of Supply of Goods and Services
under RCM

CA Satbir Singh
Section 13(3) of CGST Act
Time of supply of services.
In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of
supply shall be the earlier of the following dates, namely:—

(a) the date of payment as entered in the books of account of the recipient or the date on which the
payment is debited in his bank account, whichever is earlier; or

(b) the date immediately following sixty days from the date of issue of invoice or any other document, by
whatever name called, in lieu thereof *[by the supplier, in cases where invoice is required to be issued by
the supplier; or]

(c) the date of issue of invoice by the recipient, in cases where invoice is to be issued by the recipient:]
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) *[or
clause (c)], the time of supply shall be the date of entry in the books of account of the recipient of supply:

Provided further that in case of supply by associated enterprises, where the supplier of service is located
outside India, the time of supply shall be the date of entry in the books of account of the recipient of
supply or the date of payment, whichever is earlier.
CA Satbir Singh
Time of Supply of Services for RCM under GST
Supplier Recipient Time of Supply
Registered Registered Earlier of Following :-
i) date of payment as entered in the books of account
of the recipient or the date on which the payment is
debited in his bank account Whichever is earlier
ii) Within 60 Days from the Date of issue of Invoice
Unregistered Registered Earlier of Following :-
i) the date of payment as entered in the books of
account of the recipient or the date on which the
payment is debited in his bank account, whichever is
earlier;
ii) Date of issue of invoice by the recipient (within 30
days from date of Receipt of Goods and Services)

CA Satbir Singh
 Mr. Ram provides legal services as an advocate to Mr.Rahim (GST Registered
person) which fall under reverse charge basis
Date Events
11.04.2024 The services are provided to Mr.Rahim
13.04.2024 Mr. Ram issues an invoice to Mr.Rahim
10.05.2024 Mr Rahim makes Self Invoice (within 30 days from date of
Receipt of Services)
11.07.2024 The payment is made by Mr. Rahim through a cheque and
recorded in his books of accounts
16.07.2024 The payment gets debited from Mr. Rahim’s bank account

What will be the time of supply in the given case?

CA Satbir Singh
The time of supply is Earlier of the Following Date
Earlier of Following 11.07.2024
i) Date of payment as recorded in the books 11.07.2024
ii) Date when the payment gets debited in the books of
the recipient - 16.07.2024
Date of issue of invoice by the recipient (Rahim) 10.05.2024

Therefore, the time of supply will be 10.05.2024.

GST has to be paid under reverse charge in June 2024
as per due date of filing of GSTR 3B by Mr Rahim.

CA Satbir Singh
Section 12(3) of CGST Act
Time of supply of Goods.
In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply
shall be the earlier of the following dates, namely:—

(a) date of receipt of goods; or

(b) the date of payment as entered in the books of account of the recipient or the date on which the payment is
debited in his bank account, whichever is earlier; or

(c) the date immediately following thirty days from the date of issue of invoice or any other document, by whatever
name called, in lieu thereof by the supplier
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the
time of supply shall be the date of entry in the books of account of the recipient of supply

CA Satbir Singh
 Mr.Ram, an agriculturist supplies raw cotton (under reverse charge) to Mr. Rahim who
manufactures cotton shirts. The date wise turnout of events are given below:

Date Events
02.04.2024 Mr. Rahim approaches Mr.Ram and places an order
for 4 tonnes of cotton

11.04.2024 Mr.Rahim receives the goods

16.04.2024 Mr.Ram (agriculturist) issues an invoice
21.04.2024 Mr. Rahim makes a payment by cheque and
accordingly records it in his books of accounts.
26.04.2024 The payment gets debited from Mr.Rahim’s bank
account
What will be the time of supply in the given case?
CA Satbir Singh
The time of supply is Earlier of the Following Date
Date of receipt of goods 11.04.2024
Earlier of Following 21.04.2024
i) Date of payment as recorded in the books 21.04.2024
ii) Date when the payment gets debited in the books of
the recipient - 26.04.2024
Date immediately following thirty days from the date of 17.05.2024
issue of invoice, i.e. 16.04.2024+30days+1day=17.05.2024

Therefore, the time of supply will be 11.04.2024.

GST has to be paid under reverse charge in May 2024
as per due date of filing of GSTR 3B by Mr Rahim.

CA Satbir Singh
 Tax Invoice for GST under RCM
• Delay in Self Invoicing

Consequences Relevant Section

Interest Section 50 of CGST Act
Penalty Section 122 of CGST Act

Section 122 CGST Act Penalty : Rs 10000 or

amount of Tax Involved whichever is higher

CA Satbir Singh
How to Pay GST for RCM

CA Satbir Singh
How to Pay GST for RCM
- Cash Payment: GST RCM has to be paid in Cash from Cash Ledger.
- Electronic Credit Ledger can not be used to pay GST RCM.
- Separate ledgers should be opened in books of account for GST – RCM
Output IGST –RCM
Output CGST –RCM
Output SGST- RCM
Input IGST –RCM
Input CGST –RCM
Input SGST- RCM
-ITC Claim : After paying tax liability under RCM, the recipient can claim Input
tax credit in the same month itself he is eligible to claim ITC.

CA Satbir Singh
Input Tax Credit under GST for RCM

CA Satbir Singh
 Input Tax Credit under GST for RCM
➢ Composition Taxpayer : Can not claim ITC of GST paid under RCM
➢ Regular Taxpayer : Can claim ITC on Goods and Services used in the course of
furtherance of business.
➢ ITC Claim based on Self Invoice : ITC needs to be claimed based on Self Invoice ,
Payment Vouchers as pe Rule 36(1)(b) of CGST Rules . (Input tax credit shall be availed
by a registered person inter alia on the basis of an invoice issued in accordance with
the provisions of clause (f) of sub-section (3) of section 31 of CGST Act, subject to the
payment of tax.

➢ Reporting of Self Invoices of RCM needs to be reported in GSTR 1.

➢ Filing of GSTR 3B : RCM ITC can be claimed only when GSTR 3b Filed by Recipient and
Tax paid in Cash
➢ Time for ITC Claim : Need to Claim ITC within Time Limit as per Section 16(4) of CGST
Act CA Satbir Singh
Input Tax Credit under GST for RCM

Relevant Self Invoice Last date to

Financial Year made in claim ITC
2023-24 2024-25 30th Nov 2026

CA Satbir Singh
Supplier can claim Input Tax Credit if GST paid under
RCM by Recipient ?
➢ Supplier shall not be eligible to claim Input Tax credit of GST
paid on goods or services used to make supplies on which
recipient is liable to pay tax.
➢ Example: Director is supplying services to corporate body.
Corporate body is liable to pay GST on Services supplied by
directors under RCM. Director cannot claim ITC on goods and
services he had used to supply services to corporate body.

CA Satbir Singh
GST Return Filing for RCM

CA Satbir Singh
GSTR 1 FILING BY SUPPLIER (TABLE 4B)

CA Satbir Singh
GSTR 1 FILING BY RECIPIENT (TABLE 13)

CA Satbir Singh
GSTR 3B FILING BY RECIPIENT (TABLE 3.1 : RCM Liability)

CA Satbir Singh
GSTR 3B FILING (TABLE 4 : ITC claim of RCM)

CA Satbir Singh
GSTR 3B FILING (TABLE 4 in RED)

CA Satbir Singh
RCM Liability/ITC Statement

CA Satbir Singh
Filing GSTR 9 and GSTR 9C
by Supplier

CA Satbir Singh
Reporting in GSTR 9 by supplier
Table 5C

CA Satbir Singh
Reporting in GSTR 9C by supplier
Table 5D

CA Satbir Singh
Reporting in GSTR 9C by supplier
Table 5D

CA Satbir Singh
Filing GSTR 9 and GSTR 9C
by Recipient

CA Satbir Singh
Reporting in GSTR 9 by Recipient
Table 4G

CA Satbir Singh
Reporting in GSTR 9 by Recipient
Table 6

CA Satbir Singh
Reporting in GSTR 9C by Recipient
Table 9 in RC tab

CA Satbir Singh
 Specified Goods under RCM

Notification No. 4/2017-Central Tax (Rate) and

Notification 4/2017-Integrated Tax (Rate) both dated 28-6-
2017 effective from 1-7-2017.

CA Satbir Singh
Specified Goods under RCM

CA Satbir Singh
Specified Goods under RCM

CA Satbir Singh
Specified Goods under RCM

CA Satbir Singh
Specified Goods under RCM

CA Satbir Singh
 Specified Goods under RCM

1. Substituted by Notification No. 14/2022-Central Tax (Rate), dated 30-12-2022, w.e.f. 1-1-2023. Prior to its
substitution, Sl. No. 3A as inserted by Notification No. 10/2021-Central Tax (Rate), dated 30-9-2021, w.e.f. 1-10-
2021, CA Satbir Singh
Specified Goods under RCM

CA Satbir Singh
Specified Goods under RCM

CA Satbir Singh
Specified Goods under RCM

CA Satbir Singh
 Specified Goods under RCM

1. Substituted for "Central Government, State Government, Union territory or a local authority" by Notification No.
19/2023-Central Tax (Rate), dated 19-10-2023, w.e.f. 20-10-2023.
CA Satbir Singh
 Specified Goods under RCM
What is the taxability of intra-State and inter-State supply of used vehicles, seized
and confiscated goods, old and used goods, waste and scrap made by the Central
Government, State Government, Union territory or a local authority to an
unregistered person. ?

it is clarified that the respective Government departments (i.e. Central

Government, State Government, Union territory or a local authority) shall be
liable to get registered and pay GST on intra-State and inter-State supply of used
vehicles, seized and confiscated goods, old and used goods, waste and scrap
made by them to an unregistered person subject to the provisions of sections 22
and 24 of the CGST Act. [Circular No. 76/50/2018-GST Dated 31st December
2018]
CA Satbir Singh
Specified Goods under RCM

CA Satbir Singh
 Specified Goods under RCM

*Inserted by Notification No. 6/2024-Central Tax (Rate), dated 8-10-2024, w.e.f. 10-10-2024

CA Satbir Singh
Specified Services under RCM

CA Satbir Singh
 Specified Services under RCM : IGST
Import of Services
Notification No. 10/2017-IT (Rates) dated 28-6-2017, effective from 1-7-2017

o Non-taxable online recipient" means any Government, local authority, governmental

authority, an individual or any other person not registered and receiving online
information and database access or retrieval (OIDAR)services in relation to any
purpose other than commerce, industry or any other business or profession, located in
taxable territory.
CA Satbir Singh
 -Service recipient Type of Service Treatme GST Who is liable to pay
in taxable territory receiving B2C services nt in GST Applicabilit GST
from out of India y
Government, a local authority, a OIDAR Taxable Forward Supplier in non-
governmental authority, an individual charge taxable territory
or any unregistered person in relation
to any purpose other than commerce,
industry or any other business or profession
Government, a local authority, a Other than Exempt - -
governmental authority, an individual OIDAR
or any unregistered person in relation
to any purpose other than commerce,
industry or any other business or profession
Other than Government, a local authority, a All including Taxable Reverse Service recipient
governmental authority, an individual OIDAR Charge in taxable territory
or any unregistered person in relation
to any purpose other than commerce,
industry or any other business or profession
CA Satbir Singh
 "online information and database access or retrieval services" means services whose
delivery is mediated by information technology over the internet or an electronic
network and the nature of which renders their supply essentially
automated and involving minimal human intervention and impossible to ensure in the
absence of information technology and includes electronic services such as,—
I. advertising on the internet;
II. providing cloud services;
III.provision of e-books, movie, music, software and other intangibles through
telecommunication networks or internet
IV.providing data or information, retrievable or otherwise, to any person in electronic
form through a computer network
V. online supplies of digital content (movies, television shows, music and the like);
VI.digital data storage; and
VII.online gaming;
[Section 2(17) of IGST Act 2017]
CA Satbir Singh
➢ Supply received from OIDAR Service provider
Rule 64 and FORM GSTR-5A of CGST Rules, 2017 to be amended to require
OIDAR service providers to provide the details of supplies made to registered
persons in India his return in FORM GSTR-5A. This will help in tracking due
payment of tax on reverse charge basis by such registered persons in India in
respect of supplies received from OIDAR service providers.[ 50th GST Council
Meeting recommendations on 11.07.2023 ] New Table 5B and 5C in GST R 5A

CA Satbir Singh
RCM on transportation of goods by a vessel from a place
outside India up to the customs station of clearance in
India.

** Omitted by Notification No. 13/2023 - Integrated Tax (Rate), dated 26-9-2023, w.e.f. 1-10-
2023..

CA Satbir Singh
 Goods Transport Agency Services
Sr NO 1.

CA Satbir Singh
 “Goods Transport Agency" means any person who
provides service in relation to transport of goods by road
and issues consignment note, by whatever name called.

[Para 2(ze) of Notification No. 12/2017-Central Tax

(Rate)]

CA Satbir Singh
RCM on GTA will not apply to following :-
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, only for the purpose of deducting
tax under section 51 and not for making a taxable
supply of goods or services:]

[ Inserted by Notification No. 29/2018-Central Tax (Rate),

dated 31-12-2018, w.e.f.CA1-1-2019.]
Satbir Singh
RCM on GTA will not apply if ..
i) The supplier has taken registration under the CGST Act,2017 and exercised the
option to pay tax on the services of GTA in relation to transport of goods supplied
by him under forward charge; and
ii) The supplier has issued a tax invoice to the recipient charging Central Tax at the
applicable rates and has made a declaration as prescribed in Annexure III on such
Invoices issued by him.

[ Inserted by Notification No. 5/2022-Central Tax (Rate), dated 13-7-2022, w.e.f.

18-7-2022

CA Satbir Singh
[ 19. Inserted by Notification No. 5/2022-Central Tax (Rate), dated 13-
7-2022, w.e.f. 18-7-2022
20. Substituted for "during the Financial Year_________ under
forward charge" by Notification No.8/2023-Central Tax (Rate), dated 26-7-2023,
w.e.f. 27-7-2023.]

CA Satbir Singh
Who will pay GST on GTA Services
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;

CA Satbir Singh
GTA paying Tax @ 12% (6% CGST and 6% SGST) :-

Words "who has not paid central tax at the rate of 6%,"
omitted by Notification No. 5/2022-Central Tax(Rate),
dated 13-7-2022, w.e.f. 18-7-2022. Prior to its omission
said words as inserted by Notification No. 22/2017-
Central Tax (Rate), dated 22-8-2017.

CA Satbir Singh
 RCM on Advocate Services
Sr No
Category of Supply of Services Supplier of Recipient of
service Service

2. *[Services provided by an individual advocate An individual Any business

including a senior advocate or firm of advocates advocate entity located in
by way of legal services, directly or indirectly. including a the taxable
Explanation.—"Legal service" means any service senior advocate territory
provided in relation to advice , consultancy or or firm of
assistance in any branch of law, in any manner advocates.
and includes representational services before
any court, tribunal or authority.]

*. As corrected by Corrigendum GSR 1199(E), dated 25-9-2017.

CA Satbir Singh
 RCM on Arbitral Tribunal Services

Sr No
Category of Supply of Services Supplier of Recipient of
service Service

3 Services supplied by an arbitral An arbitral Any business

tribunal to a business entity. tribunal. entity located in
the taxable
territory.

CA Satbir Singh
 RCM on Sponsorship Services
Sr No
Category of Supply of Services Supplier of Recipient of
service Service

4 Services provided by way of Any person Any body

sponsorship to anybody corporate or corporate or
partnership firm. partnership firm
located in the
taxable territory.

CA Satbir Singh
 RCM on Govt Services
Sr No
Category of Supply of Services Supplier of Recipient of
service Service

5 Services supplied by the Central Central Any business entity

Government, State Government, Government, located in the
Union territory or local authority to a State taxable territory
business entity excluding,— Government
, Union
territory or
local
authority

CA Satbir Singh
Excluding following :-
(1) Renting of Immovable Property, and
(2) Services specified below—
i) Services by the Department of Posts3a[and the
Ministry of Railways(Indian Railways)]3b[***];

(ii) Services in relation to an aircraftor a vessel , inside or

outside the precincts of a port or an airport;

(iii) Transport of goods or passengers.

CA Satbir Singh
 RCM on Renting of Property by Govt
Sr No
Category of Supply of Services Supplier of Recipient of
service Service

*5A Services supplied by the Central Central Any person

Government **[excluding the Government registered under
Ministry of Railways (Indian ,State the Central Goods
Railways)], State Government, Government and Services Tax
Union territory or local authority by ,Union territory Act, 2017.]
way of renting of immovable or local
property to a person registered authority
under the Central Goods and
Services Tax Act, 2017(12 of 2017)

*Inserted by Notification No. 3/2018-Central Tax (Rate), dated 25-1-2018, w.e.f. 25-1-2018
** Inserted by Notification No. 14/2023-Central TaxCA(Rate), dated 19-10-2023, w.e.f. 20-10-2023.
Satbir Singh
 RCM on Renting of Residential Property
24
Category of Supply of Services Supplier of Recipient of
service Service

*[5AA Service by way of renting of Any person Any registered

residential dwelling to a registered person.]
person.

*Inserted by Notification No. 5/2022-Central Tax (Rate), dated 13-7-2022, w.e.f. 18-7-2022

CA Satbir Singh
Dates RCM on Exemption
18.07.2022 to Service by way of renting of Services by way of renting of residential
31.12.2022 residential dwelling to a dwelling for use as residence [except where
registered person the residential dwelling is rented to a
registered person].
From 01.01.2023 Service by way of renting of For the purpose of exemption under this
residential dwelling to a entry, this entry shall cover services by way
registered person of renting of residential dwelling to a
registered person where
i) The registered person is proprietor of a
proprietorship concern and rents the
residential dwelling in his personal
capacity for use as his own residence; and
(ii) such renting is on his own account
and not that of the proprietorship
concern.]
CA Satbir Singh
➢ Residential dwelling is not defined in GST ACT
➢Dwelling Place is different form mere “residence” or mere
a house .A Dwelling place connotes a sense of permanency
a sense of attachment and a sense of surrounding , which
permit a person to say that this house is his home ( IT.
Comm, Vs Fulabahi Khodabhai AIR 1958 Bom 41)
➢Thus hotel, Motel, Inn , Guest house, Campsite ,Lodge,
House Boat or like places do not qualify as residential
dwelling.

CA Satbir Singh
➢Status of the property in Municipal Records.
➢Conditions of the property when it is rented.
(to old property not suitable for a living)
➢Structural Status of the property(residential
or otherwise)

CA Satbir Singh
➢RCM applies even when residential dwelling is
used for commercial purposes by lessee (e.g
House taken on rent by company and sub let to
students and working professionals

➢Residential dwelling is taken on rent by registered

persons who in-turn rents it to another registered
person. GST RCM Payable.

CA Satbir Singh
*Exemption to Individual for Residential dwelling taken on rent
➢ There is exemption from payment of GST on services by way of renting
of residential dwelling to a registered person where
➢ the registered person is proprietor of a proprietorship concern and
rents the residential dwelling in his personal capacity for use as his
own residence; and
➢ such renting is on his own account and not that of the proprietorship
concern.
*Inserted by Notification No. 15/2022-Central Tax (Rate), dated 30-12-
2022, w.e.f. 1-1-2023.

CA Satbir Singh
Mr A (Landlord) rent out his residential house to Mr B
(unregistered) who in turns rents out this property to Mr C for
use as residence.

What is the GST treatment of Transaction

➢ Between A to B
➢ Between B to C

Residential premises rented as hostel to students and working professionals is covered under
residential dwelling being used as residence and eligible for exemption : Karnataka HC Dated
07.02.2022

CA Satbir Singh
➢ Furnished House given on rent for temporary stay (a few
days) ?

➢ Govt Department allots house to its employees and charge

licence fees ?

CA Satbir Singh
➢ Chartered Accountant takes property on Rent and uses partly
for his residence and party for his business/ profession.
➢ How to claim ITC ?

CA Satbir Singh
 RCM on Renting of Commercial Property
Sr No
Category of Supply of Services Supplier of Recipient of
service Service

*[5AB Service by way of renting of [any Any Any registered

immovable property] other than unregistered person.]
residential dwelling person

*Inserted by Notification No. 9/2024-Central Tax (Rate), dated 8-10-2024, w.e.f. 10-10-2024.

CA Satbir Singh
 GST on Rent of Property

Renting of any Immovable Property Other than

Residential Dwelling Renting of Residential Dwelling
( Commercial Property, warehouse, Godown etc)

BY UNREGISTERED BY REGISTERED Rented to Registered Person

PERSON PERSON
Yes No
TO REGISTERED GST is Exempt only if property is
TO ANY PERSON Property used for used for Residence by Individual. If
PERSON
Residence / Non used for Non residence , GST to be
Residence paid on Forward Charge basis by
GST UNDER supplier
GST UNDER RCM FORWARD
GST to be paid on RCM
basis by Registered Person ITC can not be claimed if property
(Recipient) used for Personal purpose
CA Satbir Singh
Key Points:-
-Check Income Tax return filing – Rental Income from House
Property
- Check entries in Bank Account for Rent received (nature of
use of Property)
-Check entries in Profit and Loss account for Expenses (rent
Paid liable for RCM)

CA Satbir Singh
 RCM on Transfer of Development Rights
Sr No
Category of Supply of Services Supplier of Recipient of
service Service

*[5B Services supplied by any person by Any person Promoter.

way of transfer of development rights
or Floor Space Index (FSI)(including
additional FSI)for construction of a
project by a promoter

*Inserted by Notification No. 5/2019-Central Tax (Rate), dated 29-3-2019, w.e.f. 1-4-2019

CA Satbir Singh
 RCM on Long Term Lease of Land
Sr No
Category of Supply of Services Supplier of Recipient of
service Service

[5C Long term lease of land(30 years or Any person Promoter ]

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.

*Inserted by Notification No. 5/2019-Central Tax (Rate), dated 29-3-2019, w.e.f. 1-4-2019
CA Satbir Singh
 RCM on Services on Director
Sr No
Category of Supply of Services Supplier of Recipient of
service Service

6 Services supplied by a director of a A director of a The company or a

company or a body corporate to the company or a body corporate
said company or the body corporate. body located in the
corporate taxable territory.

CA Satbir Singh
➢ Salaries : Director's remuneration which are declared as "Salaries" in the books of a
company and subjected to TDS under Section 192 of the IT Act are not taxable
under Reverse Charge in GST. : CBIC Circular
➢ Fees for Technical Services : Director's remuneration which has been declared
separately other than "Salaries" in the Company's accounts and subjected to TDS
under Section 194J of the Income Tax Act, 1961 as Fees for professional or
Technical Services shall be treated as consideration for providing services and is
therefore, leviable to GST under reverse charge mechanism.
➢ Sitting Fees Etc : GST may be leviable on the Sitting fee/commission payable to
Non-Whole Time Directors/Non Executive Directors/Independent Director of the
Company
➢ Renting of Property : services supplied by a director of a company or body
corporate to the company or body corporate in his private or personal capacity
such as services supplied by way of renting of immovable property to the company
or body corporate are not taxable under RCM.

CA Satbir Singh
➢ Personal guarantee : offered by directors to the bank against the credit
limits/loans being sanctioned to the company : No GST Payable under
RCM

CA Satbir Singh
 RCM on Services Insurance Agent
Sr No
Category of Supply of Services Supplier of Recipient of
service Service

7 Services supplied by an An insurance Any person carrying

insurance agent to any person agent on insurance
carrying on insurance business. business, located in
the taxable
territory.

CA Satbir Singh
 RCM on Services of recovery agents
Sr No
Category of Supply of Supplier of Recipient of Service
Services service

8 Services supplied by a A recovery A banking company or a

recovery agent to a banking agent financial institution or a
company or a financial non-banking financial
institution or a non-banking company, located in the
financial company. taxable territory.

CA Satbir Singh
 RCM on Services a Music Composer , Photographer
Sr No
Category of Supply of Services Supplier of Recipient of Service
service

*[9 Supply of services by a music composer , Music Music company,

photographer, artist or the like by way of composer, producer or the like,
transfer or permitting the use or photographer, located in the taxable
enjoyment of a copyright covered under artist, or the territory.]
clause (a)of sub-section (1) of section 13 like
of the Copyright Act, 1957relating to
original dramatic, musical or artistic
works to a music company, producer or
the like.

*Substituted by Notification No. 22/2019-Central Tax (Rate), dated 30-9-2019, w.e.f. 1-10-2019.

CA Satbir Singh
 RCM on Services of Author
Sr No
Category of Supply of Services Supplier of Recipient of Service
service

*[9A Supply of services by an author by way Author Publisher located in the

of transferor permitting the use or taxable territory:
enjoyment of a copyright covered
under clause (a)of sub-section (1) of
section 13 of the Copyright Act,
1957relating to original literary works
to a publisher.

*Inserted by Notification No. 22/2019-Central Tax (Rate), dated 30-9-2019, w.e.f. 1-10-2019.

CA Satbir Singh
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 Services Tax Act, 2017 under forward charge, and to
comply with all the provisions of Central Goods and Services 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.]
CA Satbir Singh
 RCM On Services of members of Overseeing Committee
Sr No
Category of Supply of Supplier of Recipient of
Services service Service

*[10. Supply of services by the Members of Reserve Bank of

members of Overseeing Over-seeing India
Committee to Reserve Bank Committee
of India constituted by
the Reserve Bank
of India

*Inserted by Notification No. 33/2017-Central Tax (Rate), dated 13-10-2017, w.e.f. 13-10-
2017.

CA Satbir Singh
 RCM on Services of Individual Direct Selling Agents
Sr No
Category of Supply of Services Supplier of service Recipient of Service

*[11. Services supplied by individual Direct Individual Direct A banking company or

Selling Agents (DSAs) other than a Selling Agents(DSAs) a non-banking
body corporate , partnership or other than a body financial company,
limited liability partnership firm to corporate , located in the taxable
bank or non-banking financial partnership or territory.]
company(NBFCs). limited liability
partnership firm.

*Inserted by Notification No. 15/2018-Central Tax (Rate), dated 26-7-2018, w.e.f. 27-7-2018.

CA Satbir Singh
 RCM on Services of business facilitator
Sr No
Category of Supply of Services Supplier of Recipient of
service Service

*[12. Services provided by business Business A banking

facilitator (BF) to a banking facilitator company,
company (BF) located in the
taxable
territory.]

*Inserted by Notification No. 29/2018-Central Tax (Rate), dated 31-12-2018, w.e.f. 1-1-2019.

CA Satbir Singh
 Business facilitator :-
It has been provided under notification number 12/2017-CT (Rate) or
09/2017-IT (Rate).
"2(o) "business facilitator or business correspondent" means an
intermediary appointed under the business facilitator model or the
business correspondent model by a banking company or an insurance
company under the guidelines issued by the Reserve Bank of India;"

CA Satbir Singh
 RCM on Services of Agent of Business Correspondent
Sr No
Category of Supply of Services Supplier of Recipient of
service Service

*[13. Services provided by an agent An agent of A business

of business correspondent (BC) business correspondent,
to business correspondent(BC) correspond located in the
ent (BC) taxable
territory]

*Inserted by Notification No. 29/2018-Central Tax (Rate), dated 31-12-2018, w.e.f. 1-1-2019.

CA Satbir Singh
 RCM on services of supply of security personnel)
Sr No
Category of Supply of Services Supplier of Recipient of
service Service

[14. Security services (services Any person A registered

provided by way of supply of other than person, located
security personnel) provided to a body in the taxable
a registered person: corporate territory.]

*Inserted by Notification No. 29/2018-Central Tax (Rate), dated 31-12-2018, w.e.f. 1-1-2019.

CA Satbir Singh
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.

CA Satbir Singh
o The service must be supply of security personnel. (Supply may be
of men or women for Security). Thus following services are not
covered and GST has to be paid on forward charge basis on
following by supplier:––
▪ Services of sniffer Dog
▪ CCTV Security Equipment supply/Walki-Talki etc
▪ Security Van services etc provides to Banks
▪ Theft investigation services etc
▪ Verification of Background of candidates: Ifnewly appointed
employee's background check is done by security agency,
such services provided by security agency will continue to be
liable under forward charge.
CA Satbir Singh
 Renting of Motor Vehicle
Sr No
Category of Supply of Services Supplier of service Recipient of Service

*[15. Services provided by way of Any person , other than Any body corporate
renting of any motor vehicle a body corporate who located in the taxable
designed to carry passengers supplies the territory.]
where the cost of fuel is included service to a body
in the corporate and does not
consideration charged from the issue an invoice
service recipient , provided to a charging central tax at
body corporate the rate of 6 per cent to
the service recipient

*Inserted by Notification No. 22/2019-Central Tax (Rate), dated 30-9-2019, w.e.f. 1-10-2019.
** Substituted by Notification No. 29/2019-Central Tax (Rate), dated 31-12-2019, w.e.f. 31-12-2019.

CA Satbir Singh
Substituted by Notification No. 29/2019-Central Tax (Rate), dated 31-12-2019, w.e.f. 31-12-2019. Prior to its substitution,
Sl. No. 15 read as under :

CA Satbir Singh
 Passenger transport service
where the body corporate avails the passenger transport
service for specific journeys or voyages and does not take
vehicle on rent for any particular period of time, the service
would fall under Heading 9964 and the body corporate shall
not be liable to pay GST on the same under RCM.

CA Satbir Singh
➢Renting of motor vehicles like road rollers, Trucks etc which are not
designed to carry passengers will not be subject to reverse
charge.GST under forward charge may apply.
➢If cost of fuel is not included in consideration charged then it will
not be subject to reverse charge. E.g. only rental/finance lease
of motor vehicle where cost of fuel is not included in consideration.
➢ ITC cannot be availed by Supplier, as RCM supplies are treated as
Exempt supplies under Section 17 of CGST Act.
➢ Recipient also can not avail ITC after payment of GST under RCM,
as it is generally blocked ITC under Section 17(5) of CGST act 2017.

CA Satbir Singh
 RCM on Services of Lending of Securities
Sr No
Category of Supply of Services Supplier of service Recipient of Service

*[16. Services of lending of securities Lender i.e. a person who Borrower i.e. a person
under Securities Lending deposits the securities who borrows the
Scheme, 1997("Scheme") of registered in his name or in securities under the
Securities and Exchange Board the name of any other Scheme through an
of India ("SEBI"), as amended. person duly authorised on approved intermediary
his behalf with an approved of SEBI.]
intermediary for the
purpose of lending under
the Scheme of SEBI

*Inserted by Notification No. 22/2019-Central Tax (Rate), dated 30-9-2019, w.e.f. 1-10-2019.

CA Satbir Singh
 Accounts and Records in case of inward
supplies liable for RCM in GST
Rule 56(1) of CGST Rule 2017prescribe as follow:—
56.Maintenance of accounts by registered persons.––(1) Every
registered person shall keep and maintain, in addition to the particulars
mentioned in sub-section (1) of section 35, a true and correct account of
the goods or services imported or exported or ofsupplies attracting
payment of tax on reverse charge along with the relevant documents,
including invoices, bills of supply, delivery challans, credit notes, debit
notes, receipt vouchers, payment vouchers and refund vouchers.

CA Satbir Singh
➢ Whether GST under RCM has to be paid on
advance paid to supplier of Goods?
➢ Whether Input Service Distributor can receive
supplies liable to Reverse Charge?
➢ Whether Input Service Distributor can receive
supplies liable to Reverse Charge?

CA Satbir Singh
 RCM case Laws
Exhibition services received in non-taxable territory from person located in
non-taxable territory are taxable under RCM: HIGH COURT OF RAJASTHAN ( Savio
Jewellery v. Commissioner, Central Goods and Service Tax PANKAJ
BHANDARI AND MRS. SHUBHA MEHTA, JJ. D.B. CIVIL WRIT PETITION NO. 1910 OF 2024
MAY 2, 2024 ]

CA Satbir Singh
Nature of Expenses in Profit and Loss Account and
Balance sheet to be checked for following
Reason Act
- TDS Applicability Income Tax Act
- Personal Vs Capital Nature Income Tax Act
- Section 43B Disallowance Income Tax Act
-Prior Period Expenses Income Tax Act
- Input Tax Credit Eligibility GST Act
- Reverse Charge Liability GST Act

CA Satbir Singh