RCM Liability on Government Services

• June 21, 2020
• CA Chandan Agarwal's Office

The basic concept of Indirect Tax is that the person supplying goods or services, collects tax from the recipient and thereafter deposits the same with the Government. But in certain transactions, it may happen that the recipient of the goods or services is required to deposit the tax directly to the Government Treasury and this process is known as Reverse Charge Mechanism.

Under GST Law, Section 9 of the CGST Act, 2017 and Section 5 of the IGST Act, 2017 empowers the Central Government to notify such goods and services on supply of which the recipient shall be liable to pay applicable GST under the Reverse Charge Mechanism.

The Central Government by exercising its powers under Section 9(3) of the CGST Act, 2017 and Section 5(3) of the IGST Act, 2017 has notified various goods and services on supply of which the recipient is liable to pay applicable GST. One of the services notified, vide Notification No. 13/2017-CT (R) dated 28.06.2017 and Notification No. 10/2017-IT (R) dated 28.06.2017, is the service received from the Government by the business entity. The entry can be understood as under:

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