Rcm

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 June 2013 Dear Sir,
An individual who has annual turnover about 20 lacs from retail business. Whether he is also liable to pay service tax under RCM.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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09 September 2013 there is no turnover limit specified for apply service tax under RCM

what kind of service you are receiving and from whom

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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20 July 2025 As of pre-GST (i.e., under Service Tax regime before 1st July 2017) — which is the context for a question dated 04 June 2013 — here's how Reverse Charge Mechanism (RCM) applied:

✅ Applicability of RCM under Service Tax (Pre-GST Era):
Even individuals or small businesses (including those with turnover below ₹10 lakh exemption threshold under Service Tax) were liable to pay Service Tax under RCM if they received services that attracted RCM.

🔴 Threshold exemption (₹10 lakh) was not available for liability under reverse charge.
🧾 Example Services under RCM (Pre-GST):
Goods Transport Agency (GTA)
Legal services from an advocate
Services from a director to a company
Sponsorship services
Security services in some cases
📌 Conclusion:
Even if the individual's retail business turnover is ₹20 lakh, and he is not registered for Service Tax, he would still be liable to pay Service Tax under RCM if he received taxable services covered under RCM.

✅ Yes, RCM applies regardless of whether the individual has crossed the service tax registration threshold.

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