TaxTMI 
TaxTMI 
Applicability of RCM on Government Services
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....pplicability of RCM on Government Services<br> Query (Issue) Started By: - Ramanathan Seshan Dated:- 7-5-2025 Last Reply Date:- 19-5-2025 Goods and Services Tax - GST<br>Got 5 Replies<br>GST<br>Dear Experts, I'm looking for clarity on the applicability of the Reverse Charge Mechanism (RCM) under GST for certain services provided by the government. Specifically, does RCM apply to: * Factory li....
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....cense issuance and renewal * FSSAI license issuance and renewal * Other regulatory licenses provided by government departments Requesting esteemed members to share practical experience, or official references regarding this. Regards, S Ram Reply By VIPUL JHAVERI: The Reply: govt services normally are exempt if its their constitutional functions two notifications are of importance appl....
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....icability 13/2017 - Central Tax (Rate) dated 28th June 2017 and list services involving transactions with government have been exempted vide notification number 12/2017 - Central Tax (Rate) dated 28th June 2017 1. Entry number 9 Services provided by Central Government, State Government, Union territory or a local authority where the consideration for such services does not e....
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....xceed five thousand rupees 2. Entry number 47 Services provided by the Central Government, State Government, Union territory or local authority by way of- (a) registration required under any law for the time being in force; (b) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, including fire license, req....
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....uired under any law for the time being in force normally registration also would mean renewal fees as well, as its continuation of registrations however various govt tender fees are asked to be paid RCM Reply By YAGAY andSUN: The Reply: Great question - and an important one, especially for businesses dealing with regulatory compliance costs. ✅ Reverse Charge Mechanism (RCM) un....
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....der GST for Government Services RCM does apply to certain services provided by the Central Government, State Government, Union territory or local authority to business entities, as per Notification No. 13/2017 - Central Tax (Rate) dated 28.06.2017. However, there are notable exemptions. 🔍 Key Rule: Notification No. 12/2017 - Central Tax (Rate) Under Entry No. 5 of this notification, se....
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....rvices provided by the Government to business entities are taxable under RCM, except: * Services by way of registration (e.g., factory licenses, trade licenses, FSSAI registrations). * Licensing services for carrying out any business. * Assignment of right to use natural resources (like mining, telecom spectrum). * Renting of immovable property (RCM applies but is separately notified). *....
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.... Services where consideration is in the form of fees or charges levied under any law. 🧾 RCM Applicability on Specific Licenses Service Type Nature RCM Applicability Reference / Notes Factory License (issuance/renewal) Regulatory license under Factories Act ❌ Not under RCM (exempted) Covered under Entry 5, Notif. 12/2017 - Govt. fee-based FSSAI License (issuance/renewal) R....
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....egulatory license for food business ❌ Not under RCM (exempted) Considered licensing services; fee-based Trade License / Pollution Control NOC Statutory licensing ❌ Not under RCM (exempted) Fees/charges under local/state law Renting of Immovable Property If by govt to a business entity ✅ RCM applies Specifically notified in Notif. 13/2017 Mining rights / natural resou....
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....rce use Licensing/right to use ✅ RCM applies Explicitly covered under RCM 📌 Practical Understanding If you are paying fees to the government for obtaining: * A license (like FSSAI or Factory license), * Registration, * Or any statutory regulatory approval, ➡️ RCM is not applicable as these are covered under the exemption notification (Notification 12/2017). ....
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.... You do not need to pay GST under RCM or issue a self-invoice in such cases. ✅ Conclusion For factory licenses, FSSAI, and other regulatory licenses: * These are statutory services provided by the government for a fee. * GST is exempted, and RCM does not apply. * No GST liability arises on the recipient business entity under RCM. *** Reply By Sadanand Bulbule: The Reply: Her....
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....e I wish add that, GST is not payable on services provided by way of grant of alcoholic liquor licence against licence fees collected by the State Government, since it falls under the segment of statutory services. Reply By Shilpi Jain: The Reply: There is no specific exemption under GST for license taken unless it would fall under 'registration under any law'. Thus if a license is issu....
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....ed as a part of being registered under any law, exemption is applicable from GST. Reply By FSSAI License: The Reply: Dear S Ram, At Metacorp, we clarify the applicability of the Reverse Charge Mechanism (RCM) under GST for government services: * Factory License Issuance/Renewal: GST at 18% applies under RCM on fees paid to state authorities (if consideration exceeds INR 5,000 and no exemption....
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.... applies). Businesses can claim Input Tax Credit (ITC). * FSSAI License Issuance/Renewal: 18% GST under RCM applies on fees for state licenses/registrations. No GST is charged by FSSAI on the FoSCoS portal; recipients discharge GST liability and can claim ITC. * Other Regulatory Licenses: GST at 18% under RCM typically applies on fees for services like pollution control or trade licenses, unle....
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....ss exempted. ITC can be claimed. Metacorp's Expertise: We ensure seamless RCM compliance, helping clients account for GST and optimize ITC claims. Refer to Notification No. 13/2017-Central Tax (Rate) and FSSAI orders for details. For further assistance, contact Metacorp's GST specialists.<br> Discussion Forum - Knowledge Sharing ....