no payment of GST under RCM- Purchased through Credit cards

[Rohit K]

Dear All,

A software company has to purchase some software licenses from outside India. What it does is, it is telling their employees to purchase these software licenses through their credit cards and the amount incurred by their employees is being reimbursed to them on time to time basis. In this case, whether GST under RCM to be paid by the company as the software is being utilized by the company.

If the bill is on the name of the company then I think, GST under RCM is applicable. But bill is on the name of the employee but the company is utilizing it, then GST Applicable?

AI Summary

Reverse charge mechanism applies when company uses software bought via employees' cards, obliging the company to pay GST.
The company is the true recipient where software licenses purchased by employees are used by the company; such purchases constitute import of service and, if digital, OIDAR services. Routing payment through employee credit cards and reimbursing in INR does not alter the company's reverse charge liability. A company registered under GST must account for and pay tax on reverse charge, may claim input tax credit if eligible, and should record the expenditure as imported services. Using employees as intermediaries is likely to be treated as camouflage and invite audit scrutiny, tax, interest and penalties.