Reverse charge mechanism
This query is : Resolved
27 February 2018
Suppose i avail service from cab service provider. If that cab service provoder is an unregistered person . If i am registered i am suppos to pay under RCM. But i am not into such cab service business. Then am i eligible to claim input tax credit paid under RCM for cab service availed ?
28 February 2018
No...
ITC Not available to the recipient of Cab Service.
CA Ashish Agrawal
(Expert)
28 February 2018
First of all currently RCM is applicable on services specified u/s 9(3), and as per section 9(3), RCM is applicable for passenger transport services provided through electronic commerce operator, whereby the electronic commerce operator will have to collect and pay GST, so the clause is not applicable in your scenario.
Joswin Punchakunnel
(Expert)
28 February 2018
Dear Deepa,
Kindly note that reverse charge liability of registered dealers in respect of transactions with the unregistered dealers has been temporarily suspended with effect from 28th June 2017 via notification no 8/2017 .The suspension would remain in force till 31st March 2018.
Now as far as your query regarding the availability of input tax credit is concerned, the condition for eligibility of credit of tax is that the services should have been used for the purpose of the business.
Therefore you shall be eligible to take the input tax credit.
Kindly note that reverse charge liability of registered dealers in respect of transactions with the unregistered dealers has been temporarily suspended with effect from 28th June 2017 via notification no 8/2017 .The suspension would remain in force till 31st March 2018.
Now as far as your query regarding the availability of input tax credit is concerned, the condition for eligibility of credit of tax is that the services should have been used for the purpose of the business.
Therefore you shall be eligible to take the input tax credit.
30 October 2026
Under current law RCM on cab hire arises only where a non-corporate operator rents a cab with fuel to a body corporate and does not charge tax under forward charge, not merely because the operator is unregistered; even then ITC is generally blocked under Sec 17(5)(b)(i) unless the employer is legally obliged to provide the cab or uses it for the same line of service.
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