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

Reverse charge on imported marketing services: recipient liable for tax unless service qualifies as intermediary or commission linked. Imported marketing or business support services received by an Indian recipient are treated as import of services with the place of supply at the recipient's location, making the recipient liable under the Reverse Charge Mechanism for monthly fixed fee arrangements. An exception arises where the supplier functions as an agent and receives commission tied to specific sales: such intermediary or commission linked transactions may have a place of supply outside India and thus fall outside reverse charge.