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

Reverse charge on rental services: registered recipients must pay GST under RCM even if below threshold, with input credit rules applying.
Reverse charge liability arises on rental services received by a registered person from an unregistered supplier; a voluntarily registered person below the turnover threshold must pay tax under the reverse charge mechanism, the exemption does not remove that obligation, and where outward supplies are taxable the recipient may claim input tax credit-otherwise the registrant should regularise compliance or consider cancellation.