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

Reverse Charge Mechanism exclusion for telecom subcontracting clarified; RCM paid qualifies for input tax credit from payment date. RCM does not apply to the described telecom installation and optical fibre works and related URD subcontracted activities. The threshold of Rs. 5,000 per day applied to all expense types and payment modes (until the stated cut off), though a contrary view suggests no RCM on URD from GST commencement. RCM paid is eligible for Input Tax Credit in the year of payment and the time limit runs from payment date, with a self invoice issued at payment.