Charity and RCM

Save Share

This query is : Resolved

Quick Summary

This discussion clarifies the applicability of Reverse Charge Mechanism (RCM) on rent payments made by a registered charity. While payments to landlords for guest house rent may attract RCM, payments directly to poor individuals for housing are less likely to be liable. The key distinction lies in whether the payment is considered business-related rent or genuine charitable aid, with potential GST implications depending on this classification.

Rajkumar Gutti

Rajkumar Gutti (Querist)

10 July 2025 We are registered person, & paying rent to our guest house, as well as paying house rent to various poor people. There is no any agreement.
This said expenses we debited to charity purpose head. House owner payment received receipt is attached to expenses voucher.
Is RCM payment required.

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

10 July 2025 Yes, RCM applicable...

Rajkumar Gutti

Rajkumar Gutti (Querist)

10 July 2025 But, sir there is no any agreement. We only paid to poor, needy people. Debited to P&L A/c as Charity.

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

10 July 2025 The 48th GST Council meeting clarified that no GST is payable under RCM where a residential dwelling is rented to a registered person if it is rented in their personal capacity and for use as their own residence and not on account of their business.
Had you paid amount directly to poor people, GST would not arise, but you are paying it to landlords; who are getting it as rent, so the liability to pay RCM by registered person arises. Now it is up to you to decide whether you are treating it as charity or rent; query may arise which may drag it in some trouble.

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

26 September 2025 Good luck...

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now