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

[KALLESHAMURTHY MURTHY]

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 dealer below threshold must pay GST under RCM for rent from unregistered owner; input credit only if taxable outputs A voluntarily registered dealer with turnover below the threshold rents premises from an unregistered owner. Following the amended notifications introducing reverse charge for rental services from unregistered persons, contributors conclude that a registrant must discharge GST under RCM despite not exceeding turnover limits. RCM liability is not negated by the registration exemption thresholds; compulsory registration triggers RCM obligations. It was also noted that GST paid under RCM can be claimed as input tax credit only to the extent the recipient has taxable outward supplies, raising the question whether credit is available when the recipient has no output tax liability.