RCM on import of services

[chetan jadhav]

Respected Experts,

Company is engaged in a business of providing coaching services with respect to courses/degrees offered by foreign institute.

facts are as under -

1. Providing coaching for courses offered by foreign institute.

2. For the coaching, It charge fees including GST.

3. One of the aspects of business is, students need to enroll with foreign institute for which they need to pay admission and other fees.

4. For the sake a convenience, company collects the admission/other fees (without GST) from individual students and make the lump sump payment to foreign institute as per the deadlines. once course is completed, foreign institute offers the degree or completion certificate to students. each student has their own login credentials.

5. while making a payment to foreign institute, banks insist for 15CA/CB and hence the same is provided.

Now my query is regarding RCM on admission/other fees payable to foreign institute.

My understanding with respect to GST -

1. Since foreign institutes are not covered under exemption, fees charged by them may get covered under import of services.

2. Import of services is liable for RCM even for personal transactions.

3. Company is only acting as pure agent (collecting the fees and remitting abroad). further, services are actually rendered by foreign institute to students (as degree is offered to students)

4. Due to point no 3 above, company is not liable to pay GST under RCM. students are liable in their personal capacity as registration under GST is mandatory in case of liability under RCM.

Query -

1. Will department insist company to pay GST under RCM

2. if company makes a payment under RCM, will it get the input tax credit for RCM paid.

3. weather my understanding of GST liability on individual student is correct.

Kindly through some light on the provisions of the law.

[Shilpi Jain]

The RCM entry in the IGST notification excludes a non-taxable online recipient. So the student may not be liable to GST under RCM.

Yes, the admission fee, etc. would not be liable in the hands of the compnay if the pure agent conditions are satisfied.

AI Summary

Reverse charge mechanism may not apply where recipients are non-taxable online and intermediary qualifies as pure agent. Reverse charge liability on fees remitted to a foreign institute depends on whether recipients fall within the IGST notification exclusion for non taxable online recipients and whether the intermediary company qualifies as a pure agent. If the intermediary merely collects and remits fees on behalf of students and meets pure agent conditions, the admission and other fees would not be taxable in the hands of the company under reverse charge.