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There is grand confusion regarding GST on Services under RCM & GST on Renting of Immovable Property

Let's Clarify.

  • Schedule II of Section 7 of CGST gives the list of activities that will be treated as supply of goods or supply of services
  • Subsection 4 of Section 9 of CGST states that "The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both."
  • Subsection 3 of Section 9 of CGST gives power to Government, on recommendation of council to notify goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both.

In exercise of above power Government has issued notification dated 28th June 2017 No. 13/2017 - Central Tax (Rate)

Analysis of the above:

  • All the taxable services procured from unregistered person by registered person gets covered under RCM
  • GST on taxable services as contained in above mentioned notification has to be paid under RCM even though the same is procured from Registered Person

Thus all the services which are not contained in above notification are also taxable and has to be paid under RCM if procured from unregistered supplier.

Renting of Immovable Property:

  • Schedule II of Section 7 of CGST defines Renting of Immovable Property as supply of Services
  • By virtue of Section 9(4) of CGST, GST on rent has to be paid under RCM by registered person, if the rent is paid by registered person to unregistered person.
  • However renting of residential dwelling for use as residence is not subject to GST

The author is Chartered Accountant and can also be reached at ca.hirenhariya@gmail.com


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(Chartered Accountant)
Category GST   Report

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