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RCM for LAnd

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sona1

MANAGER

281 Points Posted on 20 July 2022

ABC Pvt. Ltd. (GST Register Company ) pays RENT Per Month Rs. 30,000.00 to Mr. Sukanta Mondal (one of the Director of ABC Pvt. Ltd. Company) (but GST Unregister Person) after Deducted TDS for LAND purpose where ABC Pvt Ltd. Company Situated & doing here official cum factory related daily work ,

For this transaction Purpose ABC Pvt. Ltd. Company will pay RCM against this as per new rule w.e.f. 18/07/2022

Replies (2)

Quick Summary

This discussion clarifies the applicability of Reverse Charge Mechanism (RCM) for land rent paid by a GST-registered company to a GST-unregistered director. While new rules from 18/07/2022 suggest RCM might not apply in this specific scenario, it's confirmed that TDS must be deducted if the annual rent exceeds Rs. 2,40,000. The prevailing notification indicates GST at 18% under RCM is payable by the registered recipient, who can then claim Input Tax Credit (ITC).

CA Puja Sharma

Chartered Accountant

3528 Points Posted on 20 July 2022

No RCM will apply in this case under GST.

However, you have to deduct TDS while making the payment because the rent exceeds Rs. 2,40,000 per annum. TDS @ 10% will apply in this case.

sona1

MANAGER

281 Points Posted on 21 July 2022

Thanks for reply Puja Sharma

But madam As per Notification No 05/2022- Central Tax (Rate) dated 13.7.2022 said

GST unregistered person provides service of renting of residential dwelling for commercial purposes to a GST Registered Person. Here, the GST registered recipient shall pay GST @ 18% under RCM and may claim ITC on the same.