RCM APPICABILITY FOR SERVICES PROVIDER FOR OVERSEA VENDOR

[RAJIV PATEL]

Dear Sir,

May we request you to kindly advice & guide us on the applicability of GST & RCM on our case. Your comment & support will be highly appreciated.

Stage 1 - We are presently buying hotel & transport from Bhutan. The Bhutan operator does not charge any GST as it does not fall in Indian tax jurisdiction. Hence let take our purchase price as INR 100

Stage 2 – Now when we sale the package to X agency in Indian then we bill the agency with GST of 5%.

Here our sale become our Bhutan Purchase INR 100 + Our markup 10 (100 + markup 10 ) + GST of 5% on 110 +5% GST = INR 115.50

Comments required

• Are the above transaction fine as per the current GST procedure
• Do we need to charge RCM of 5% on our purchase price from Bhutan i.e 100
• In case we charge RCM then our tax components become 10%
• Will we get input credit for paying the RCM for oversea supplier who is not part of Indian tax jurisdiction.
• In case we don’t get input credit then our product become 10% higher in compare to any direct supplier from Bhutan to come to india and lock in business. Anyway we are already higher by 5% as we are paying GST of 5% hence RCM will become a extra loading for us.

Your comment & advice will be highly appreciated

Regards

Rajiv

[Kishan Barai]

RCM would be Applicable if purchase price is above 5000 INR from India Only

[Ganeshan Kalyani]

In my view purchase from Bhutan is an import. The IGST paid on such purchase is an eligible credit.

[subramanian vijayakumar]

Yes it is interstate. Supply. IGST IS ATTRACTED I THINK IAM SUPPOSED TO BE CORRECT

AI Summary

Reverse charge mechanism applicability for overseas supplier services may depend on import classification and IGST credit eligibility. Whether GST and reverse charge mechanism apply to services procured from a Bhutanese tour operator for resale hinges on classification as an import of services or a domestic acquisition; respondents differed, with one noting RCM applicability only for domestic purchases above a reported threshold and others treating the Bhutan purchase as an import attracting IGST that may be eligible for input tax credit.