RCM on Royalty

[ABHISHEK Kumar]

Dear Sir,

One of our Client is a Government Contractor engaged in construction of Roads. The government deducts Royalty among other deductions from Gross Bill Value. Whether GST on RCM is payable on Such Royalty and if Yes at What Rate.

AI Summary

Government Contractor Faces GST Under Reverse Charge on Royalty; 5% RCM Rate Applicable for Goods-Related Royalties A government contractor involved in road construction is facing deductions, including royalty, from their gross bill value. The query is whether Goods and Services Tax (GST) under the Reverse Charge Mechanism (RCM) is applicable to such royalty, and if so, at what rate. The response suggests that if the royalty is related to goods, the applicable RCM rate is 5%, and the rate for goods would determine the rate of royalty. Further clarification on the specific activity for which the government is deducting the royalty is requested.