Was RCM provisions applicable on rent paid in the financial year 2017-18?

Great question! Here’s the clarity on Reverse Charge Mechanism (RCM) on rent paid in FY 17-18 under GST:

GST Context for FY 17-18

• GST was implemented in India from 1st July 17.

• In the initial GST rollout, certain supplies were subject to RCM, meaning the recipient had to pay the GST instead of the supplier.

Applicability of RCM on Rent in FY 17-18:

• Rent paid for immovable property (like office premises) is generally a service under GST.

• RCM on rent of immovable property applies if the recipient is a registered person and the supplier is unregistered.

• Specifically, Section 9(4) of CGST Act, 2017 states that GST is payable on a reverse charge basis on rent paid to an unregistered person if the rent exceeds Rs. 5,000 per day or Rs. 1,50,000 per month (this threshold was introduced later).

For FY 2017-18:

• RCM on rent paid to unregistered persons was not applicable immediately from July 17.

• The Government notified RCM on rent for immovable property only from 1st July 19 (after introduction of certain threshold limits).

• So, for the financial year 17-18, RCM was NOT applicable on rent paid to unregistered persons.

Summary:

• No, RCM provisions were NOT applicable on rent paid in FY 17-18.

• The recipient was not required to pay GST on reverse charge basis on rent during that period.

• Normal GST provisions would apply if the supplier was registered.