RCM in Works Contract of all types
This query is : Resolved
13 July 2017
RCM Rate for
Sub Contract, Labour, Transport, Hire Charges Professional Fees
13 July 2017
GST Service Rate Booklet https://www.caclubindia.com/share_files/details.asp?mod_id=73505
20 July 2025
Here’s a quick summary of RCM applicability and rates under GST on various services related to works contract, subcontracting, labor, transport, hire charges, and professional fees:
1. Works Contract Services
Definition: Works contract involves both supply of goods and services relating to construction, repair, maintenance, or installation.
RCM Applicability:
Generally, RCM applies only if the supplier is unregistered or if notified under GST rules.
Rate: GST rate on works contract varies (usually 12% or 18% depending on nature).
2. Sub-Contracting
When a registered contractor subcontracts to an unregistered subcontractor, the contractor (recipient) has to pay GST under RCM on services received from unregistered subcontractor.
RCM Rate: Same GST rate as applicable for works contract services (generally 18%).
If subcontractor is registered and charges GST, then no RCM.
3. Labour Charges (Works Contract Labour)
Labour charges paid to unregistered persons fall under RCM.
If labour provider is unregistered, recipient pays GST under RCM.
RCM Rate: Applicable GST rate on works contract services (usually 18%).
4. Transport Services by Goods Transport Agencies (GTA)
When services are received from unregistered GTA (Goods Transport Agency), the recipient is liable to pay GST under RCM.
RCM Rate: 5% (without input tax credit).
If GTA is registered and charges GST, no RCM.
5. Hire Charges (Hiring of Vehicles, Machinery, etc.)
Services received from unregistered persons for hiring of vehicles or machinery may attract RCM.
RCM Rate: Standard GST rate applicable for the service (often 18%).
If supplier is registered, no RCM.
6. Professional Fees
Services received from unregistered professionals (CA, Consultant, Lawyer, Architect, etc.) attract RCM.
Recipient pays GST under RCM if the professional is unregistered.
RCM Rate: 18% standard GST rate on professional services.
1. Works Contract Services
Definition: Works contract involves both supply of goods and services relating to construction, repair, maintenance, or installation.
RCM Applicability:
Generally, RCM applies only if the supplier is unregistered or if notified under GST rules.
Rate: GST rate on works contract varies (usually 12% or 18% depending on nature).
2. Sub-Contracting
When a registered contractor subcontracts to an unregistered subcontractor, the contractor (recipient) has to pay GST under RCM on services received from unregistered subcontractor.
RCM Rate: Same GST rate as applicable for works contract services (generally 18%).
If subcontractor is registered and charges GST, then no RCM.
3. Labour Charges (Works Contract Labour)
Labour charges paid to unregistered persons fall under RCM.
If labour provider is unregistered, recipient pays GST under RCM.
RCM Rate: Applicable GST rate on works contract services (usually 18%).
4. Transport Services by Goods Transport Agencies (GTA)
When services are received from unregistered GTA (Goods Transport Agency), the recipient is liable to pay GST under RCM.
RCM Rate: 5% (without input tax credit).
If GTA is registered and charges GST, no RCM.
5. Hire Charges (Hiring of Vehicles, Machinery, etc.)
Services received from unregistered persons for hiring of vehicles or machinery may attract RCM.
RCM Rate: Standard GST rate applicable for the service (often 18%).
If supplier is registered, no RCM.
6. Professional Fees
Services received from unregistered professionals (CA, Consultant, Lawyer, Architect, etc.) attract RCM.
Recipient pays GST under RCM if the professional is unregistered.
RCM Rate: 18% standard GST rate on professional services.
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