RCM Applicability on NBFC or not.
This query is : Resolved
15 February 2025
If Person is Unregistered in GST & Providing DSA Service and having 70 lakh commission income it is required to get registered under GST Act or RCM Provision is apply on NBFC.
12 August 2025
Scenario:
An unregistered person is providing DSA (Direct Selling Agent) services to an NBFC.
The unregistered DSA earns commission income of Rs. 70 lakhs.
Question: Does the NBFC have to pay GST under Reverse Charge Mechanism (RCM)? Also, is the unregistered DSA required to register under GST?
Key Points:
GST Registration for DSA (Service Provider):
If the unregistered DSA’s aggregate turnover (including commission income) exceeds Rs. 20 lakhs (Rs. 10 lakhs for special category states), then the DSA must register under GST.
Since the DSA’s commission is Rs. 70 lakhs, they must get registered under GST.
RCM on NBFC (Recipient):
As per GST law, services supplied by an unregistered person to a registered person (here NBFC is registered) are subject to RCM.
This means NBFC has to pay GST on commission received from unregistered DSA under reverse charge.
NBFC will pay GST under RCM and can claim ITC if eligible.
Summary:
Unregistered DSA with Rs. 70 lakh commission must register under GST.
Until registration is done, NBFC must pay GST under RCM on commission paid to DSA.
Once DSA is registered, they will issue GST invoices and charge GST normally; then NBFC will pay GST on outward supplies as per normal procedure (no RCM).
Final Note:
It’s advisable for the DSA to get registered to avoid GST liability under RCM on NBFC.
NBFC should ensure proper compliance on RCM and claim ITC accordingly.
An unregistered person is providing DSA (Direct Selling Agent) services to an NBFC.
The unregistered DSA earns commission income of Rs. 70 lakhs.
Question: Does the NBFC have to pay GST under Reverse Charge Mechanism (RCM)? Also, is the unregistered DSA required to register under GST?
Key Points:
GST Registration for DSA (Service Provider):
If the unregistered DSA’s aggregate turnover (including commission income) exceeds Rs. 20 lakhs (Rs. 10 lakhs for special category states), then the DSA must register under GST.
Since the DSA’s commission is Rs. 70 lakhs, they must get registered under GST.
RCM on NBFC (Recipient):
As per GST law, services supplied by an unregistered person to a registered person (here NBFC is registered) are subject to RCM.
This means NBFC has to pay GST on commission received from unregistered DSA under reverse charge.
NBFC will pay GST under RCM and can claim ITC if eligible.
Summary:
Unregistered DSA with Rs. 70 lakh commission must register under GST.
Until registration is done, NBFC must pay GST under RCM on commission paid to DSA.
Once DSA is registered, they will issue GST invoices and charge GST normally; then NBFC will pay GST on outward supplies as per normal procedure (no RCM).
Final Note:
It’s advisable for the DSA to get registered to avoid GST liability under RCM on NBFC.
NBFC should ensure proper compliance on RCM and claim ITC accordingly.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CG after sale of flat
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
