Reverse Charge Mechanism, Goods and Services Tax - GST

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

I am providing legal services to a society where they provide only a trust-based activity. Now as per sec 9(3) of CGST/SGST Act, the receiver who receive the legal services should discharge the tax liability to the government exchequer. In this case, the society does not have any taxable sales / services for consideration and they don't have the GST registration also.

My query is how the gst will be discharged by the client. Please explain to me with a suitable notification with an explanation.

Thanks in Advance.

Posts / Replies

[ARVIND JAIN]

As per Sec-24. Compulsory registration in certain cases- (iii) persons who are required to pay tax under reverse charge;

So Simple take registration in the case of the Trust and Pay as it comes under the compulsory registration category.

[KASTURI SETHI]

Legal services provided to a business entity are covered under RCM. Here the question arises whether the society in question is charitable trust or not ? Throw more light on the constitution of society.

[THYAGARAJAN KALYANASUNDARAM]

Dear sir,

The society undertook the only charitable activity and registered one.

Thanks in advance.

[KASTURI SETHI]

If service receiver (Trust) is not a business entity, RCM is not applicable. FCM is applicable and Service Provider will avail threshold exemption. Also see Serial No.45 of Notification No.12/2017 CT (R) dated 28.6.17 as amended.

[JACOB KORA]

Please confirm whether RCM is applicable on service received from an advocate to a society/Trust which is registered under GST.

[KASTURI SETHI]

It is not necessary that registered person is a business entity. There are so many factors for a person who gets registered with the GST department. In the subject query, service receiver is non-business entity. Hence RCM not applicable.

There are different definitions of 'charitable' in the Income Tax Act and CGST Act.