Supply of service is in Karnataka. whether tax payable under IGST or RCM under CGST/SGST.

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

A registered person in West Bengal sponsored some masonry labourers to Karnataka for building construction work. He raised an IGST tax invoice. The same was paid through the Bank by the service recipient builder. Supply of service rendered in Karnataka. What is the actual tax liability, SGST /CGST or IGST? Whether the builder in Karnataka is required to pay tax under RCM?

[Sadanand Bulbule]

Dear

In the situaion explained by you, following is the position:

The correct tax liability is IGST, payable by the West Bengal supplier under forward charge.  The Karnataka builder is not liable to pay GST under RCM.  The builder, if registered and eligible, may claim input tax credit (ITC) of IGST paid on such services.

Manpower supply is not notified under Section 9[3] & 9[4] for RCM.

Refer: Section 7[1] and 12[3] of the IGST Act as regards to "Place of Supply".

[Shilpi Jain]

Tax liability is IGST

No liability under RCM. The WB registered person would charge applicable GST

AI Summary

Supplier from one state must charge IGST for masonry labour where service is rendered; builder not liable under RCM A West Bengal-registered supplier provided masonry labour in Karnataka; the correct tax treatment is IGST charged and paid by the supplier under forward charge because the service's place of supply is in Karnataka. The Karnataka builder is not liable to pay tax under reverse charge and may claim input tax credit of the IGST paid if eligible. Manpower/masonry supply is not covered by RCM notifications, so RCM does not apply in this scenario.