RCM (REVERSE CHARGE) SCENARIOS

D.1 — GTA service to manufacturer (Notif 13/2017-CT(R))

Facts: Mumbai manufacturer receives GTA services Rs. 50,000 from Mumbai-based GTA opting for 5% rate.

Computation / Steps:

Step 1. Notif 13/2017-CT(R) — GTA service RCM on recipient (excluding GTA opting for 12% forward charge).

Step 2. Intra-Maharashtra supply.

Step 3. Manufacturer pays CGST 2.5% + MGST 2.5% on RCM = Rs. 2,500.

Step 4. Self-invoice under Rule 36; payment via electronic cash ledger.

Step 5. ITC claimed in GSTR-3B Table 4(A)(3) — RCM inwards.

Step 6. Reported in GSTR-3B Table 3.1(d) — RCM payable.

Result: GTA RCM standard framework. Net cash impact zero (RCM paid + ITC claimed).

D.2 — Legal services from advocate to corporate

Facts: Delhi company receives legal services Rs. 1 lakh from Delhi-based advocate.

Computation / Steps:

Step 1. Notif 13/2017-CT(R) — legal services by advocate RCM on business entity recipient.

Step 2. Intra-Delhi supply.

Step 3. Company pays CGST 9% + DGST 9% on RCM = Rs. 18,000.

Step 4. Advocate does not charge GST in invoice.

Step 5. Company's RCM payment + ITC claim — net cash neutral.

Result: Legal services RCM on company recipient. Advocate exempt; company pays GST on RCM.

D.3 — Sponsorship service to corporate

Facts: Delhi company sponsors event Rs. 5 lakh; receives sponsorship service from event organizer.

Computation / Steps:

Step 1. Notif 13/2017-CT(R) — sponsorship service RCM on body corporate / partnership firm recipient.

Step 2. Intra-Delhi (if event in Delhi) — CGST + DGST RCM.

Step 3. Company pays CGST 9% + DGST 9% on RCM = Rs. 90,000.

Step 4. Self-invoice + ITC claim.

Result: Sponsorship RCM on corporate sponsor.

D.4 — Director sitting fees / commission

Facts: Mumbai company pays sitting fees Rs. 2 lakh to non-executive director per board meeting.

Computation / Steps:

Step 1. Notif 13/2017-CT(R) — services by director to company RCM on company.

Step 2. Intra-Maharashtra (typically director and company same State).

Step 3. Company pays CGST 9% + MGST 9% on RCM.

Step 4. Director need not register.

Step 5. Self-invoice + ITC claim.

Result: Director services RCM on company. Critical for board fees / commission compliance.

D.5 — Substituted s. 9(4) RCM — real-estate cement procurement

Facts: Delhi real-estate promoter procures cement Rs. 1 cr from unregistered suppliers during quarter.

Computation / Steps:

Step 1. Pre-01.02.2019: Original s. 9(4) — RCM on ALL unregistered procurements (suspended).

Step 2. Post-01.02.2019: Substituted s. 9(4) + Notif 7/2019-CT(R) — RCM on real-estate promoters for cement, capital goods, > 80% input threshold from unregistered.

Step 3. Promoter pays CGST 14% + DGST 14% on RCM = Rs. 28 lakh.

Step 4. ITC typically blocked under s. 17(5)(c)/(d) for construction (subject to Safari Retreats functionality test if leasing-out).

Step 5. Substantial cash outflow without offsetting ITC.

Result: Real-estate cement RCM significant cost. ITC eligibility per Safari Retreats functionality test.

D.6 — Import of services from foreign consultant

Facts: Delhi software company receives consulting services Rs. 30 lakh from US firm; payment in USD.

Computation / Steps:

Step 1. Import of services per s. 7(4) IGST.

Step 2. POS per s. 13(2) — recipient location = Delhi.

Step 3. RCM under s. 5(3) IGST.

Step 4. Delhi company pays IGST 18% on RCM = Rs. 5.4 lakh.

Step 5. Self-invoice + ITC.

Step 6. If foreign supplier has Indian fixed establishment under s. 2(7), may shift to forward charge.

Result: Import of services RCM on Indian recipient. Self-invoice + ITC framework.