RCM on Audit Fee

[VENU K]

In case of Cooperative Banks in Kerala audit is done by the Kerala State Cooperative Department auditors. The department collects audit fee from the banks relating to the salary cost of staff auditors assigned for the work.

The Audit Fee paid to cooperative department is an item of expenditure in the financial statements of the respective societies.

Is this amount liable for RCM ?

AI Summary

Reverse charge on audit fees: applicability hinges on whether statutory government audits are taxable services or non supply.
The dispute asks whether audit fees paid by cooperative societies to a State cooperative audit department attract reverse charge. The question hinges on whether the audit is a supply (taxable service) or a statutory governmental function (non supply under Schedule III), whether the department qualifies as Government for GST exemptions, and whether operational facts (departmental officers performing audits versus approval of private auditors) change characterization. If the audit is a taxable supply to a business entity, RCM may apply; if it is a statutory function or covered by government-service exemption, RCM would not apply.