RCM and Place of Supply

[Harshit Sanghvi]

Is there any artcile which can help us as to which taxes to be paid in RCM in following situtations:

1. I take trasnporterservices from Maharashtra and I am registered in MP. Which tax to be paid under RCM CGST SGST or IGST.

2. I pay commission to USA entity which tax to pay under RCM: IGST or CGST & SGST.

[KASTURI SETHI]

Sh.Dilip Sanghvi Ji,

Query-wise reply is as under :-

1. Under RCM Service receiver is deemed service provider.Hence CGST & SGST Applicable.

2. It is intermediary service.Place of supply is location of supplier of service under Section 13(8)(b) of IGST Act. (Pl.elaborate your query after going through the following decision of AAR)

2020 (3) TMI 894 - AUTHORITY FOR ADVANCE RULING, KARNATAKA - IN RE : FOM ALUMINIUM MACHINES PVT. LTD.

[Shilpi Jain]

Under RCM provisions the service recipient is the person liable to pay tax. Supplier will still be the supplier only.

1. In this case it will be IGST since PoS is MP and location of supplier is MH.

2. If you are paying commission to a USA entity then it will not be an import of service as for intermediary service PoS will be USA i.e. location of supplier. So this is not an inter State supply

AI Summary

Reverse Charge Mechanism: treatment varies between CGST/SGST and IGST for transport; place-of-supply governs intermediary commission. Advisers differ on RCM for transport services: one advises that where the service recipient is deemed the provider under RCM CGST and SGST apply, while another treats the same facts as an inter state supply attracting IGST when the place of supply is in the recipient's State and the supplier is in another State. For commission to a foreign entity, advisers characterise it as an intermediary service locating place of supply at the supplier's location, concluding it is not import of service and does not attract inter state tax under RCM; both note the recipient is liable under RCM.