RCM on rental services received for business by a registered person from an unregistered person

[KALLESHAMURTHY MURTHY K.N.]

Dear Sirs, 

A is a petty gross dealer registered himself under GST voluntarily, though not crossing the threshold limit of Rs. 40 lakhs and is filing returns quarterly for nil turnovers.  The shop is rented on a monthly basis, owned by a land lord not registered.

As per Notification 9/2024 dated 8-10-2024, amended to Notification 13/2017 dated 28-06-2017 by insertion of Sec. 5AB provides for paying tax under RCM by a registered person for receiving rental services from an unregistered person.

Whether “A” in the circumstance of not crossing the threshold limit but registered, is liable to tax under RCM?

AI Summary

Registered small taxpayer must pay GST under reverse charge for rent from unregistered landlord despite Section 9(3) exemption (3) A voluntarily registered small taxpayer leasing premises from an unregistered landlord must discharge GST under reverse charge for rental services per the amended notification, even if turnover remains below the threshold. Forum replies agree registration triggers RCM liability and the Section 9(3) exemption does not shield such supplies. If the registered person has taxable outward supplies, input tax credit may be available; if not, paying RCM can create compliance burdens. One practical option noted is to regularize output tax compliance or seek cancellation of registration to avoid ongoing RCM obligations.