Gst under RCM Mechanism

Save Share

This query is : Resolved

Quick Summary

This discussion clarifies whether co-operative banks need to pay GST under the Reverse Charge Mechanism (RCM) on commissions paid to unregistered pigmy agents. It explores the conditions under which RCM applies, particularly concerning agents acting as individual DSAs or business facilitators. The query also delves into the bank's eligibility for 100% Input Tax Credit (ITC) on GST paid under RCM, considering scenarios with both taxable and exempted turnovers, and discusses options for ITC reversal.

MANJUNATHA N. E

MANJUNATHA N. E (Querist)

22 February 2021 Pigmy agents of co-op Banks are unregistered service providers to Banks. Whether Bank has to pay GST under RCM mechanism on commission paid to pigmy agents @ 18 %. If so can the bank claim 100% ITC on GST paid under RCM mechanism. Bank is having both taxable and exempted turnover. Please clarify with Notifications / circulars if any.

CA Altamush Zafar

CA Altamush Zafar (Expert)

22 February 2021 Depends on which option the bank has chosen. Either it is claiming itc after proportional reversal (actual calculation) or it is reversing under adhoc method

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

29 October 2026 A bank need not do Rule 42 reversal if it opts for Sec 17(4) — it can take 50% of eligible ITC every month (Rule 38), an option that applies for the whole year; whether pigmy-agent commission is under RCM depends on whether the agent is an individual DSA/business facilitator under Notf 29/2018.

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