Applicability on Reimbursement to West Centrail Railway(Staff salary)

[Prem Choudhary]

Dear Expert

please advice RCM applicability on reimbursement to Railway towards staff appointed in our railway siding. whethse it is forwards service or RCM ?

.

[KASTURI SETHI]

An extract from FAQ on RCM

25

Whether reimbursement of expenses to staff comes under RCM?

Re-imbursement is an expense in the course or furtherance of business and if the same is against a taxable supply taken from an unregistered supplier, RCM will apply.

[Prem Choudhary]

sir

in our case the reimbursement of salary to the railway staff will attract RCM under Serial no.5 of Notification -13/2017 of Central tax (Rate).

[KASTURI SETHI]

In my view, it is not covered under RCM as transportation of goods or passengers fall in the exclusion clause of Serial no 5 of notification No.13/ 17-CT(Rate) dated 28.6.17 as amended.

[CASusheel Gupta]

Please see whether it can fall in exclusion clause of entry no. 5(2)(i) - Agency service.

If so, shall be subject to forward charge.

CA Susheel Gupta

9811004443

[Prem Choudhary]

Sir

For Agency services: The relationship b/w two persons must be principal and Agent for establish Agency Services. However in our case railway is not our agent, mearly transporter,

AI Summary

Reverse Charge Mechanism on salary reimbursements hinges on transportation exclusion and agency versus principal characterization. Whether reimbursement of salaries to railway staff at a private siding falls under RCM depends on whether the reimbursement is for a taxable supply from an unregistered supplier, whether the service is excluded as transportation of goods or passengers, and whether the arrangement constitutes agency services, in which case forward charge would apply.