Reverse Charge applicability on services rendered outside India

[UmeshBabu J]

Hi,

An Indian company appoints a company in UK for marketing its products in UK and US. A Fixed Fees is paid monthly to UK company. Whether service rendered by UK company attracts RCM?

Thanks 

[YAGAY andSUN]

Yes, the service rendered by the UK company to the Indian company does attract Reverse Charge Mechanism (RCM) under the GST law.

Here is a precise legal analysis:

The Indian company is receiving marketing services, which are classified as "intermediary services" or "business support services", depending on the exact terms. Since the supplier (UK company) is located outside India and the recipient (Indian company) is in India, this is an import of service under Section 2(11) of the IGST Act, 2017.

According to Section 5(3) of the IGST Act read with Notification No. 10/2017 – IGST (Rate) dated 28.06.2017, in cases of import of services, the recipient located in India is liable to pay IGST under Reverse Charge Mechanism.

Furthermore, as per Section 13(2) of the IGST Act, the place of supply of services (in general cases) is the location of the recipient (i.e., India). Therefore, this service qualifies as import of service, even if the marketing is done outside India, and is thus subject to RCM.

In conclusion, the monthly fixed fee paid to the UK company is liable to GST under RCM, and the Indian recipient is required to discharge the tax liability accordingly.

[Shilpi Jain]

It is not an intermediary services. Will be liable under RCM as import of services.

[deepak gulati]

In my view also No RCM being Intermidiatry services and place of supply out of India.

[Guuruswamy Raman]

If fixed fees for marketing services GST payable under RCM. If sales commission paid against  specific sales the agent become intermediary and place of supply outside India GST Under RCM not payable .

AI Summary

Indian company paying UK firm for marketing services faces GST Reverse Charge Mechanism debate under Section 2(11) IGST Act An Indian company pays fixed monthly fees to a UK company for marketing services in the UK and US markets. The discussion centers on whether these services attract Reverse Charge Mechanism under GST law. One expert argues that RCM applies, citing this as an import of services under Section 2(11) of the IGST Act, 2017, with the Indian recipient liable to pay IGST under Section 5(3) and Notification No. 10/2017. Another expert agrees RCM applies but clarifies these are not intermediary services. However, two other experts disagree, arguing that intermediary services with place of supply outside India do not attract RCM. One expert distinguishes between fixed fees (RCM applicable) and sales commission based on specific sales (no RCM as intermediary services with place of supply outside India). The discussion reveals differing interpretations of GST provisions regarding cross-border marketing services.