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Recipient of supply of servive

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Rajkumar Gutti

726 Points Joined August 2018

House rent agreement is between employee & landlord.

Rent is reimbursed to employee & same rent is paid to landlord by employee.

As per sec. 2 (93) (c ) of CGST Act shall treated as an agent of company and liable to pay RCM on rent.

This interpretation is right?

Replies (2)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9434 Points Joined December 2011

The interpretation is correct. As per Section 2(93)(c) of the CGST Act, an agent is defined as a person who supplies or receives goods or services on behalf of another person.

In this case: -

The employee is receiving rent reimbursement from the company (principal) and - Paying rent to the landlord (supplier) on behalf of the company.

Thus, the employee can be considered an agent of the company for the purpose of renting the property.

As per Section 9(5) of the CGST Act, the company is liable to pay tax on reverse charge basis (RCM) on the rent paid to the landlord through the employee.

However, it's important to note that: -

The company should have a written agreement with the employee authorizing them to act as an agent. -

The employee should be acting in the course of their employment.

Rama chary Rachakonda

Master in Accounts & high court Advocate

9434 Points Joined December 2011

The interpretation is correct. As per Section 2(93)(c) of the CGST Act, an agent is defined as a person who supplies or receives goods or services on behalf of another person.

In this case: -

The employee is receiving rent reimbursement from the company (principal) and - Paying rent to the landlord (supplier) on behalf of the company.

Thus, the employee can be considered an agent of the company for the purpose of renting the property.

As per Section 9(5) of the CGST Act, the company is liable to pay tax on reverse charge basis (RCM) on the rent paid to the landlord through the employee.

However, it's important to note that: -

The company should have a written agreement with the employee authorizing them to act as an agent. -

The employee should be acting in the course of their employment.

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