RCM BASED SERVICES RETURN FILING

For security services provided by a non-body corporate to a registered person, the tax liability under the Reverse Charge Mechanism (RCM) lies with the recipient. Your client's reporting in GSTR-1 and GSTR-3B should be handled as follows:

1. Invoicing & GSTR-1 (Supplier's Perspective)

When your client (the security agency) provides services to a client liable to pay under RCM, the invoice should not include GST.

• Invoice Detail: Include a remark on the invoice stating "Tax payable under Reverse Charge by the recipient."

• GSTR-1 Reporting: These invoices are treated as outward supplies but are not reported in the standard B2B invoice tables (Table 4A, 4B, etc.) that track forward-charge liabilities. Instead, report them in Table 14 of GSTR-1 (Supplies attracting reverse charge) or, if the portal requires, ensure they are categorized appropriately so they do not trigger a tax liability for your client.

2. GSTR-3B (Recipient's Perspective)

The burden of tax payment and reporting falls on the registered recipient (your client's customer):

• Tax Liability: The recipient must report the inward supply in Table 3.1(d) ("Inward supplies (liable to reverse charge)") of their GSTR-3B.

• Tax Payment: The recipient must pay this tax in cash through their Electronic Cash Ledger.

• ITC Claim: Once the tax is paid under RCM, the recipient can claim the Input Tax Credit (ITC) in the same period by reporting it in Table 4(A)(3) ("Inward supplies liable to reverse charge") of their GSTR-3B, subject to the conditions of Section 16.

Important Notes

• Mixed Billing: If some clients are paying the GST (Forward Charge) and others are paying under RCM, you must maintain separate records. For clients paying forward charge, you should issue regular tax invoices with GST and report these in Table 4 of GSTR-1.

• Body Corporate Status: Remember that RCM on security services is specific to scenarios where the supplier is not a body corporate and the recipient is a registered person. If your client is a body corporate, RCM may not apply, and they must charge GST on all their invoices.

• Documentation: Ensure your client maintains clear documentation for every invoice, noting whether it is an RCM-based supply or a forward-charge supply, to avoid mismatches in GST return reconciliations.

Summary: For RCM-based services, the supplier (your client) excludes GST from the invoice and reports the supply in the appropriate RCM section of GSTR-1 (Table 14), while the recipient reports the liability in Table 3.1(d) and claims ITC in Table 4 of their GSTR-3B.

Understanding GST On Security Services