GST on Payments made to Collection Agent

[sumanta nayak]

Is RCM applicable to Payments made to daily collection agents of Banks?

[Rajagopalan Ranganathan]

Sir,

According to sl. No. 8 of Notification No. 13/2017-C.T. (Rate) dated 28.06.2017 as amended in respect of services supplied by a recovery agent to a banking company or a financial institution or a non-banking financial company, gst is payable under RCM by a banking company or a financial institution or a non-banking financial company, located in the taxable territory.

[Ganeshan Kalyani]

Services supplied by a recovery agent to a banking company or a financial institution or a non-banking financial company: A banking company or a financial institution or a non-banking financial company, located in the taxable territory receiving service from a recovery agent shall pay tax under reverse charge.

[sumanta nayak]

Is RCM aplicable to daily deposit collection agents ?

[YAGAY and SUN]

In our view, yes GST is payable on Daily Collection under Reverse charge Mechanism.

[sumanta nayak]

If RCM is payable then under which clause of the notification?

[KASTURI SETHI]

Dear Querist,

I think that you are not talking about Recovery Agent. The activities of recovery agent and collection agent are entirely different. The nature of collection agent can be likened to intermediary service/ commission agent. Pl. elaborate your query.

AI Summary

Reverse charge mechanism applicability to payments to bank collection agents questioned; recovery versus collection agent distinction emphasized
Whether payments to daily collection agents by banks attract Reverse Charge Mechanism liability depends on classification of the service. Contributors note that the RCM entry covering services supplied by a recovery agent to a banking company, financial institution or non banking financial company requires the recipient to pay tax under reverse charge. Others caution that a collection agent may be functionally distinct from a recovery agent and instead resemble an intermediary or commission agent, requiring factual analysis to determine whether the recovery agent RCM entry applies.