Received SCN from GST Dept. They asked to clarify RCM liability on expenses like Freight, Power & Fuel, Salary, Labour Charges, Staff Welfare, Insurance, Traveling, Conveyance, Telephone, Audit Fee, Accounting, Legal, Misc., Shop, Bank Charges, Printing & Stationery.
Also asked to explain treatment of Rebate & Discount received with evidence.
?? Which of these expenses actually attract RCM? And how to justify rebate/discount before dept?
Most overheads not subject to GST reverse charge; RCM under Section 9(3) applies only to notified services, unregistered suppliers Tax authority issued a show-cause seeking clarification whether various overheads (freight, power, fuel, salary, labour charges, staff welfare, insurance, travel, conveyance, phone, audit/accounting/legal fees, shop/bank charges, printing/stationery, miscellaneous) attract reverse charge under GST and requested evidence on rebates/discounts. Forum consensus: most listed expenses are not subject to RCM; RCM applies only to notified services (eg. GTA freight by road, specified legal/security services, certain imports, services from unregistered suppliers such as some labour or shop rent) and context-specific insurance/legal cases. For rebates/discounts, retain agreements, invoices and credit notes and demonstrate they relate to trade of goods to avoid additional tax treatment. (AI Summary)
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