goods and service tax
Copy Page
Published on 26 April 2025
Understanding Services Under India's Reverse Charge Mechanism (RCM)
Overview of Services Under Reverse Charge Mechanism (RCM)
Stay informed about the services covered under the Reverse Charge Mechanism (RCM) as per Notification No. 13/2017-Central Tax (Rate) until 21-08-2023. This notification, issued by the Government of India’s Ministry of Finance, outlines the provisions under the Central Goods and Services Tax Act, 2017, detailing the services liable for reverse charge, along with relevant suppliers and recipients.
Updated Table of Services Under RCM
| Sl. No. | Category of Supply of Services | Supplier of Service | Recipient of Service |
|---|---|---|---|
| 1 | Supply of services by a goods transport agency (GTA) for transporting goods by road to: | Goods Transport Agency (GTA) | Various entities, including factories, co-operatives, and registered persons. |
| - a factory under the Factories Act, 1948; - a society under the Societies Registration Act, 1860; - a co-operative society; - a registered person; - a body corporate; - a partnership firm; - a casual taxable person. | |||
| Exclusions: Services provided to government departments, local authorities, or agencies registered solely for tax deduction under Section 51. Further Exclusions: If the supplier opts for forward charge and issues a tax invoice. | |||
| 2 | Services provided by an individual advocate, including senior advocates, or firms offering legal services. | Individual advocate or firm | Any business entity located in the taxable territory. |
| 3 | Services supplied by an arbitral tribunal to a business entity. | Arbitral tribunal | Any business entity. |
| 4 | Sponsorship services to any body corporate or partnership firm. | Any person | Any body corporate or partnership firm. |
| 5 | Services supplied by government bodies to a business entity, excluding specified rentals and certain mentioned services. | Central Government, State Government, etc. | Any business entity. |
| 5A | Renting of immovable property to a person registered under the CGST Act, 2017. | Central Government, State Government, etc. | Any person registered under the CGST Act. |
| 5AA | Renting of residential dwellings to registered persons. | Any person | Any registered person. |
| 5B | Transfer of development rights or Floor Space Index (FSI) for projects by a promoter. | Any person | Promoter. |
| 5C | Long-term lease of land (30 years or more) with consideration for project construction by a promoter. | Any person | Promoter. |
| 6 | Services offered by a director to the company or body corporate. | Director | The company or body corporate. |
| 7 | Services of an insurance agent to any insurance business operator. | Insurance agent | Any insurance business operator. |
| 8 | Recovery services by an agent to banking or financial institutions. | Recovery agent | Banking company or financial institution. |
| 9 | Supply of services related to copyright by musicians, photographers, or artists. | Music composers, photographers, artists | Music companies, producers, etc. |
| 9A | Services by an author regarding literary work to a publisher, with conditions for registration and invoice declaration. | Author | Publisher located in the taxable territory. |
| 10 | Services by members of the Overseeing Committee to Reserve Bank of India. | Members of Overseeing Committee | Reserve Bank of India. |
| 11 | Services by individual Direct Selling Agents (DSAs) to financial institutions. | Individual DSAs | Banking companies or NBFCs. |
| 12 | Services by a business facilitator to a banking company. | Business facilitator | Banking company. |
| 13 | Services by an agent to a business correspondent. | Agent of business correspondent | Business correspondent. |
| 14 | Security services provided to registered persons, with exclusions for government departments and tax-paying entities under specific sections. | Any person not a body corporate | Registered person. |
| 15 | Renting of passenger vehicles including fuel costs, provided to a body corporate. | Any person not a body corporate | Body corporate. |
| 16 | Lending of securities under SEBI’s Securities Lending Scheme, 1997. | Lender | Borrower under the Scheme. |
Important Definitions and Clarifications
- Goods Transport Agency (GTA) provides services related to the transportation of goods.
- Legal Service encompasses advice, consultancy, and representation in legal matters.
- Business Entity refers to any registered entity or organization engaging in trade or business activity.
- Body Corporate is defined by the Companies Act, 2013.
- Various terms related to taxation, property, and roles within contracts are applied as per their definitions in respective laws.
Conclusion
Understanding the services covered under the Reverse Charge Mechanism is crucial for compliance with the Central Goods and Services Tax Act, 2017. As notifications evolve, staying updated ensures that entities can navigate their tax obligations seamlessly.