TaxTMI 
TaxTMI 
Is RCM applicable to Payments made to daily collection agents of Banks?
GST on Payments made to Collection Agent
08 Jun 2021 
6 Replies 
8178 Views Asked by
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. (AI Summary)
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. (AI Summary)