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RCM under GST for payment of Sponsorship Fee

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Rajendra Kumar Das

Asst Manager

45 Points Joined December 2016

My Organisation paid an amount of Rs. 50000/- to a Durga Puja Committee as a Sponsorship Fee for advertisement.

Question-

This transaction will covers under RCM under GST ? Please clarify.

Replies (1)

Rama chary Rachakonda

Master in Accounts & high court Advocate

8883 Points Joined December 2011

The transaction you described involves your organization paying Rs. 50,000 to a Durga Puja Committee as a sponsorship fee for advertisement. Let's break it down: - _Sponsorship fee_: This is a consideration paid for advertising services. - _Advertisement services_: This is a supply of services, specifically advertising services. - _Durga Puja Committee_: This is the recipient of the sponsorship fee, providing the advertising services. Now, let's examine whether this transaction falls under the Reverse Charge Mechanism (RCM) under GST: - _RCM applicability_: RCM is applicable when the recipient of goods or services is required to pay GST on behalf of the supplier. In this case: - _Services_: Advertising services are provided by the Durga Puja Committee (supplier). - _Recipient_: Your organization (recipient) is paying the sponsorship fee for these services. Since your organization is the recipient of the advertising services, you are liable to pay GST under RCM. However, there's an important exception: - _Exemption_: If the Durga Puja Committee is a non-profit organization or a registered charitable trust, they might be exempt from GST registration. If the Durga Puja Committee is not registered under GST, your organization might not need to pay GST under RCM. However, it's essential to confirm their registration status and obtain their GST registration certificate or exemption certificate. To summarize: 1. Verify the Durga Puja Committee's GST registration status. 2. If they are registered, your organization will need to pay GST under RCM. 3. If they are exempt, your organization might not need to pay GST under RCM.

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