RCM sponsorship

[Madhavan iyengar]

Dear Experts

Where a Company receives sponsorship Income from a Individual who is not Registered will the same be chargeable to tax under forward charge by the Company since RCM provisions of sponsorship apply only to a body corporate and Partnership firm and not to a Individual Experts pls clarify or can it be treated as exempt as RCM does not apply

[Ganeshan Kalyani]

In my view, tax not applicable.

[Madhavan iyengar]

dear sir

thanks for your reply

does that mean is it not a supply at all

[KASTURI SETHI]

Whether the company is registered under the Company Act ?

[Madhavan iyengar]

Yes Sir the company which is in receipt of sponsorship Money is a Company Registered under the Companies act however the recipient of services ie Individual is not Regd under GST he is unregd person

[KASTURI SETHI]

The company is a body corporate.

[Madhavan iyengar]

Sir

In this case the Company is Supplier of Service and not Receipient and the Receipient is a Unregd Individual and he has paid money to Company for sponsorship

[KASTURI SETHI]

FCM is applicable. Peruse the scope of 'person' under Section 2(84) of CGST ACT read with Notification no.13/17-CT(R) Serial No.4. Emphasis is on 'Any person'.

Section 2(84) of CGST Act “person” includes -

(a) an individual;

(b) a Hindu Undivided Family;

(c) a company;

(d) a firm;

(e) a Limited Liability Partnership;

(f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India;

(g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013);

(h) any body corporate incorporated by or under the laws of a country outside India;

(i) a co-operative society registered under any law relating to co-operative societies;

(j) a local authority;

(k) Central Government or a State Government;

(l) society as defined under the Societies Registration Act, 1860 (21 of 1860);

(m) trust; and

(n) every artificial juridical person, not falling within any of the above;

[Alkesh Jani]

Shri

I agree with the views expressed by our Expert Shri Kasturiji Sir.

Ongoing through the Sl.No.4 of the Notification No.13/2017-CT (R) dated 28.06.2017 as amended from time can be simplified as under:-

4. Sponsorship service provided to any body corporate or partnership firm by any person (includes individual whether registered or not) the tax shall be paid by the recipient body corporate or partnership firm.

Therefore, in the instant case, tax is required to be paid by Body corporate under RCM .

Thanks

[Madhavan iyengar]

Therefore, in the instant case, tax is required to be paid by Body corporate under RCM .

The Facts are as under:

The Body Corporate or Company is the Supplier and the Receiver is the Individual Hence it wont fall under RCM

Kasturi sir has mentioned that this will be on forward charge to be paid by the Supplier ie Body corporate

[Alkesh Jani]

Shri

As per the given facts and circumstances, when Body Corporate supplies the service of sponsorship to an individual, if individual is registered it will be B2B (FCM) and if individual is under registered, it will be B2C (FCM).

In the given query, the supplier is individual and supply is made to Body Corporate, therefore, RCM is applicable.

Thanks

[Alkesh Jani]

In line 2nd for word 'under" please read "un"

Thanks

[Madhavan iyengar]

Dear Sir

the Facts of the issue are as under once again reproducing the same

Where a Company receives sponsorship Income from a Individual who is not Registered will the same be chargeable to tax under forward charge by the Company since RCM provisions of sponsorship apply only to a body corporate and Partnership firm and not to a Individual Experts pls clarify or can it be treated as exempt as RCM does not apply

The Company is Supplier as it has received sponsorship income and the Recipient is Individual who is not registered Since the Recipients if Individual and not a Body corporate of a Partnership firm as clarified by experts RCM is not applicable

[KASTURI SETHI]

RCM is not applicable. Sponsorship services are taxable. These are undisputed facts. The company is required to pay GST under FCM inasmuch as there is no specific exemption like sponsorship of recognised sports event is available to the company.

[Nikhil Virkar]

I am aligned with Kasturi sir. RCM will not be applicable since sponsorship service is provided to an individual and nor to any body corporate. FCM is applicable since this is taxable services and provided by body corporate which sure have turnover beyond threshold limit and transaction is not covered under exemption Notification.

[Ganeshan Kalyani]

I too agree with the views of Sri Kasturi Sir. Thanks.

I apologize for my initial view.

[Padmanathan KV]

Company is receiving the income, therefore is the supplier of service. (it is presumed that company is registered under GST).

The unregistered individual is the recipient of service.

Therefore, the said transaction will not be covered under RCM.

Since the company is registered under GST, the company will have to pay tax under forward charge under SAC 9983 @ 18%.

AI Summary

Reverse charge on sponsorship: not triggered where a registered company supplies to an unregistered individual, forward charge applies. When a registered company supplies sponsorship services and the counterparty is an unregistered individual, the reverse charge provision for sponsorship (which places liability on the recipient when the recipient is a body corporate or partnership) does not apply; the registered company as supplier must account for GST under the forward charge for taxable sponsorship services.