Entry 5 of s.9(3) of CGST act says that services provided by government agencies to business entities is taxed under reverse charges, to which renting of immovable property is under exception. That means it has to be taxed under forward charge.
Entry 5A of s.9(3) says that services of government agencies to any person ( for renting of immovable property ) are to be taxed under reverse charge.
But, here it is not given that any person excludes business entity.
Which gives an opinion that services of government agencies to business entities are taxed under reverse charge.
These interpretations are contradicting.
However, in gst every registered person is a business entity.
How is business entity different from any person.
What is the correct interpretation of entry 5 and 5a
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Renting of immovable property.
Replies (4)
Quick Summary
As per S.no. 5 under Notification 13/2017 CT (R) , It's Govt supply of Services EXLUDING ; Services of renting of Immovable Property & this services being inserted under clause 5a of Notification 3/2018 CT (r) .
RCM Applicability:
Under Clause 5 , Receptient shall be all such entities engaged in business activities whether registered in GST or not .
Under Clause 5a , Receptient shall be registered under GST
RCM Applicability:
Under Clause 5 , Receptient shall be all such entities engaged in business activities whether registered in GST or not .
Under Clause 5a , Receptient shall be registered under GST
But , aren't these two contradicting.If central government gives an immovable property on rent to a person registered under GST.
A/c to clause 5. government agencies renting immovable property to business entities taxed on forward charge. ( you said business entities , Whether registered under GST or not) as the recipient here is registered he will be included. Here , he will be taxed under forward charge.
If same case , seen according to clause 5a , will be taxed under reverse charge.
As government agency is renting immovable property to a GST registered person.
What is it that I am missing in my interpretation?
A/c to clause 5. government agencies renting immovable property to business entities taxed on forward charge. ( you said business entities , Whether registered under GST or not) as the recipient here is registered he will be included. Here , he will be taxed under forward charge.
If same case , seen according to clause 5a , will be taxed under reverse charge.
As government agency is renting immovable property to a GST registered person.
What is it that I am missing in my interpretation?
Upto 24th January 2018 - Renting of immovable property by govt agencies to business entities under Forward charge.
From 25th Jan 2018 onwards (notif. 3/2018-CT(R)) - Renting of immovable property by govt. agencies to registered persons under GST under RCM. Otherwise would remain under Forward charge. (ex: to a person not registered under GST).
Therefore, a person who is not registered, who rents an immovable property from govt. need not get registered as the transaction would not be liable to RCM.
Hope you could understand the difference.
Yes correct sir
It was under RCM only after Notification 3/2018 CT (R) being issued.
It was under RCM only after Notification 3/2018 CT (R) being issued.
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