Dear Sir, I would like to seek your guidance regarding the applicability of the Reverse Charge Mechanism (RCM) under GST in the following scenario:
An individual is providing IT consultancy services to a company on a full-time basis ( this service delivering to SEZ client). Although the person is working similarly to a full-time employee, the engagement is on a consultancy/contractual basis. Accordingly, deducting TDS under section 194J of the Income Tax Act, as the payments are professional fees. The monthly consultancy remuneration is approximately ₹4,00,000 and contract would be 1 to 3 years.
It is important to note that the said individual is unregistered under GST.
Given the above circumstances, we would like your expert opinion on the following:
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Whether the services provided by this unregistered individual (IT consultant) attract RCM liability under the GST Act?
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If yes, under which specific provision or notification does the liability arise?
As per our understanding, RCM under Section 9(4) of the CGST Act, which previously covered supplies from unregistered persons to registered persons, has been restricted only to specific notified classes of goods or services and recipients, and may not apply in this case. However, your expert confirmation would be greatly appreciated to ensure compliance.
We look forward to your valuable suggestion on the matter.
CAclubindia
