GST - APPLICABILITY OF RCM

[shivashankar mr]

I have 3 points to know about RCM

1. whether RCM is applicable for the following Works:

By taking work from ACT, Airtel & other Telecom companies. (TELECOMMUNICATION WORK) for laying & Installation of pipes and ducts and connecting the cables. Splicing work for Optical Fibre Cable. like

SAC : 440410 HDD (HORIZONTAL DITRECTIONAL DRILLING)
SAC : 9954 OFC Pulling in Prelaid Duct
SAC : 9987 Duct clamping (horiz/verti) on wall/ceiling w/clamp saddle using RAWL plug etc

for all the above work they issue material & some of material we have to buy & install as per PO

the same above said work given to URD Subcontractors for LABOUR, DIGGING, TRENCHING WORK,BITUMEN WORK, MANHOLE INSTALLATION, HDD WORK, CABLE PULLING WORK etd., ( whether these expenses attract RCM )

2. whether RCM for URD Expenses above ₹ 5000/- per day is applicable only for cash payments or any mode of payments.

3. If any payment made before filing Annual Return for RCM under DRC-03.for previous year, is it available for current year liability. ( ex: if RCM paid for 2019-20 before annual return filing, can we take input for 2020-21 )

kindly guide

[Venkataprasad Pasupuleti]

Dear sir,

The stated expenses are not liable under RCM.

The threshold limit of 5,000 per day (relevant upto 13.10.2017) applies for all types of expenses. However, a view is possible to say no RCM on urd procurements is liable from the beginning of GST (01.07.2017) irrespective of threshold limit.

The RCM liability paid would be eligible for ITC in the year of payment and the time limit counts from the payment date (self invoice would be given at the time of payment).

AI Summary

Clarification on RCM under GST: Telecommunication expenses not applicable; 5,000 threshold expired in 2017; ITC eligibility explained. A user inquired about the applicability of Reverse Charge Mechanism (RCM) under GST for telecommunication-related works, including subcontracted labor and material expenses. They questioned if RCM applies to expenses over 5,000 per day, regardless of payment mode, and if RCM payments made before filing the annual return for a previous year could be credited in the current year. The response clarified that the mentioned expenses do not fall under RCM. The 5,000 threshold was relevant only until October 13, 2017, and RCM liability paid is eligible for Input Tax Credit (ITC) in the payment year, with the time limit starting from the payment date.