rcm on rent

[Satbir singh wahi]

gst unregistered landlord in Goa sends rent bill for building in goa to punjab gst registered company , now punjab registered company needs to pay RCM , it will be igst or cgst and sgst.

[Sadanand Bulbule]

Dear 

In terms of Section 12[3] of the IGST Act, it is to be CGST plus SGST under RCM in the hands of the registered company who has utilised such services at Goa. It is like hotel accommodation bill at Goa.

Is that Punjab company not registered in Goa?

[Satbir singh wahi]

Sir Punjab company only registered in punjab and not registered in Goa.

[Sadanand Bulbule]

Sir

Could you explain the purpose of hiring the building at Goa, whether for commercial or residential use, to under the depth of your query?

[Satbir singh wahi]

Sir Company has hired commercial building in Goa  to get software personnel sit and do work for company in punjab. All Salary and other payments made from punjab.

[Sadanand Bulbule]

Sir

In that event, are you not liable for registration in Goa from where you are receiving software services? The place from where you make salary is a secondary issue.

In my opinion, in terms of Section 24 [iii], you are liable for registration at Goa.

[KASTURI SETHI]

I fully support the views of Sh.Sadanand Bulbule'Sir.

Under RCM the service recipient is deemed service provider.

[VENU K]

Can it come under compulsory registration under 24(iii) assuming the rent is billed to and paid by the entity in Goa?. RCM on rent is applicable only for a registered person. So as long as the unit in Goa remains an unregistered person he wont be liable to RCM and hence I don't think Sec 24(iii) will make him liable for compulsory registration. The logic is, since it is a company, it will have to have license from local authority etc to do business in Goa.

But even if it is not liable for RCM,  I think it will come under compulsory registration since, this will be deemed as a fixed establishment requiring registration as it is a place which is charectarised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services , or to receive and use services for its own needs under Sec 2(5).

The entity will be deemed as a distinct person . In GST transactions between distinct person are deemed as supply. So in my opinion this will need compulsory registration under Sec 24(i) as a person making interstate taxable supply from day one of its establishment.  RCM rent will also have to be paid by this entity.

My understanding.

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir, 

Your Company is registered under GST in Punjab but hired a commercial building in Goa for which you have to pay tax under RCM towards CGST & SGST being the place of supply is in Goa. The Company is not registered in Goa and hence, the services received in Goa would be treated as 'end user' and not liable to claim ITC on such payment. 

If the Company has any transaction between Punjab and Goa, is required to get registered under GST in Goa, compulsorily u/s 24 (i) &(iii).

[Padmanathan KV]

I hold an unpopular view that the Punjab Registered Company will have to compulsorily register in Goa and pay CGST and UTGST.

[KALLESHAMURTHY MURTHY K.N.]

Dear Sri

Padmanathan KV ji

Sir

Please elaborate on the tax liability payable by the Registered person in Punjab for the rent bill received against the corporate building situated in Goa from an unregistered person.

[VENU K]

The entity will be deemed as a distinct person the day they establish a branch because he is having a fixed establishment at Goa.All the services inter se between Goa and HO will be deemed as taxable supplies.Naturally he has to compulsorily register in Goa.He must also bill for deemed services and supplies between HO and Goa.He must also pay RCM on rent at Goa and can take ITC as per provisions.

In GST transactions between distinct persons in different states are deemed as supply. So in my opinion this will need compulsory registration under Sec 24(i) as a person making interstate taxable supply from day one of its establishment. RCM rent will also have to be paid by this entity.

[Satbir singh wahi]

Thanks all for reply.

[Yash Shah]

According to Section 12(3) of IGST Act 2017, Place of supply (POS) in case of renting of immovable property shall be the location at which the immovable property is located.

Further, as per Section 8(2) of the IGST Act, supply of services where the location of the supplier and POS of services are in the same state or union territory shall be treated as intra-state supply

As per Section 24(iii) of the CGST Act 2017, a person who is required to pay tax under RCM needs to take compulsory registration.

In the given case, since the building is located in Goa, POS of renting of building shall be Goa and since location of supplier is also in Goa therefore this shall be treated as intra-state supply. Therefore, the company registered in Punjab is required to take registration in Goa (u/s 24(iii)) and needs to pay tax under RCM under CGST & SGST

[Sadanand Bulbule]

Dear querist Sir

My gratitude to you for accepting all replies.

[Shilpi Jain]

Registration requirement triggers due to supply being made from Goa. Due to the requirement to register in Goa, RCM liabiltiy also arises as an intra-State supply and NOT IGST.

[Prakash and Thiagarajan]

Dear All,

I have scenario, wherein a guest house is taken in a different state (say Goa) where the company is not registered. The renting of Guest house is for long duration and as and when Company personnel visits this state where it's customer is located, instead of staying in a hotel, they stay in guest house. The Company is registered in Karnataka. Since the guest house is used for residential purpose and landlord is unregistered at Goa, RCM needs to be paid by the Company. In this scenario, will it be IGST or CGST/SGST? Should the company register at Goa? 

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir, 

Your query is the same as above.

You are required to get registration in Goa as per Sec. 24 (iii) of the CGST Act as you are liable to pay CGST & SGST under RCM for the building hired on a long-term basis. You cannot pay IGST or can't avail of ITC on rent paid in Goa in the State of Karnataka since the place of supply of service is Goa.

AI Summary

Reverse charge on rent: intra state CGST and SGST apply where property is located, triggering local registration.
Renting of immovable property located in Goa is an intra state supply and, where the landlord is unregistered, the out of state company receiving the service must pay tax under the reverse charge mechanism as CGST plus SGST. If the company creates a fixed or distinct establishment in Goa by hiring the commercial premises, it becomes liable for compulsory local registration and must account for RCM and treat inter establishment supplies as taxable between distinct persons.