Rcm applicable on the installation of a.c.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 November 2013 Our company is into trading of electronic goods and also provides repairs and maintenance services. At the time of selling of Air condition to the customer, the installation expense are included in the A.C. price. Our company has entered into contract with another proprietorship firm to install the A.C. at the customer's place and raise the invoice directly in name of our company instead of customer. The invoice is raised by the contractor co. who goes for installation, without charging service tax as the proprietorship firm is not registered under service tax as its revenue doesn't exceed 10 Lakhs. So now my query is that whether RCM is applicable on our company for the installation of A.C. at the customer's place on the invoices raised by our contractor company.

Please guide us in the above matter.

CA. Narottam Kumar Rawat

CA. Narottam Kumar Rawat (Expert)
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09 November 2013 Yes, this activity fall under Works Contract and you are liable to pay service tax under reverse charge even his turnover less than 10 lac. Also check valuation rules

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Pratik Bhansali

Pratik Bhansali (Expert)
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09 November 2013 It is to be noted that small service provider exemption of Rs. 10 lakhs is not available in case of reverse charge liability.

However, in your case it seems that the vendor who is installing AC is providing only labour work. Reverse charge mechanism in this case can apply if it is a works contract or manpower supply. The list of services where reverse charge applies is as per Notification 30/2012. If the vendor is supplying any materials along with installation then he can fall under works contract category and reverse charge will apply then.

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Querist : Anonymous

Querist : Anonymous (Querist)

11 November 2013 Sir, in above case the material is not supplied by the company. Only a contract is entered by us to get the A.C. installed for any order booked by us. So will it come under manpower supply ? Kindly clarify as per defintion of Manpower Supply - service provided or to be provided to any person, by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner; Here we inform the company to install the a.c. after we receive the order from customer and then it goes for installation

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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20 July 2025 Key points:
Is installation service under RCM?
Under Service Tax regime (prior to GST), installation, repair, and maintenance services provided by unregistered service providers to a registered person are covered under RCM. The recipient (your company) is liable to pay service tax under reverse charge.
Is manpower supply applicable here?
Manpower supply means providing human resource temporarily to another business.
Installation service does NOT qualify as manpower supply, because the contractor is providing a service, not just supplying manpower.
So, what about your case?
Since installation is a taxable service, and the contractor is unregistered (no service tax charged), your company is liable to pay service tax on the installation charges under RCM.

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