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REGARDING RCM ON ROYALTY OF MINING...

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Suresh S. Tejwani

proprietor

1197 Points Posted on 05 October 2021

I AM A PARTNER AND I HAVE LEASE AGREEMENT FOR MINING ON MY OWN NAME AND I HAVE A BUSINESS UNDER PARTNERSHIP FIRM. AND ROYALTY EXPENSES ARE PAID FROM MY BUSINESS. SO WHETHER I HAVE TO PAY RCM ON ROYALTY FROM MY FIRM AND CAN CLAIM CREDIT ?..OR I HAVE TO APPLY FOR NEW REGISTRATION AS PROPRIETOR AND HAVE TO SHOW SUB LESASE TO THE FIRM..?

WHETHER IT WILL BE CORRECT PROCEDURE IF LEASE AGREEMENT IS ON THE NAME OF PARTNER AND PAYING RCM AND CLAIM OF CREDIT ON FIRMS GSTIN...?

Replies (5)

Quick Summary

This discussion clarifies the application of the Reverse Charge Mechanism (RCM) on mining royalty payments. Even if the lease agreement is in an individual partner's name, the partnership firm making the royalty payments and claiming it as an expense is considered the recipient of the service for GST purposes. Therefore, the firm is liable to pay GST under RCM and can claim the Input Tax Credit (ITC).

Rama chary Rachakonda

Master in Accounts & high court Advocate

7021 Points Posted on 05 October 2021

Yes, on royalty GST will apply under reverse charge mechanism. Further, such payment of GST under reverse charge mechanism would be eligible as ITC in the hands of the recipient of supply for payment of GST.

Suresh S. Tejwani

proprietor

1197 Points Posted on 05 October 2021

BUT SIR IF LEASE AGREEMENT IS ON THE NAME OF PARTNER. AND ALL BUSSINESS OF MINING IS CONDUCTED UNDER PARTNERSHIP FIRM THAN WHO HAVE TO PAY TAX ...PARTNERSHIP FIRM OR PARTNER..?