Summary of "RCM under GST | Complete Revision | CA Final IDT Revision Jan'26 | CA Akshansh Garg"

Summary of the Video: “RCM under GST | Complete Revision | CA Final IDT Revision Jan‘26 | CA Akshansh Garg”

This comprehensive revision lecture by CA Akshansh Garg focuses on the concept of Reverse Charge Mechanism (RCM) under GST, tailored for CA Final Integrated Taxation (IDT) students preparing for May 2025 and November 2025 exams. The session covers amendments, practical applications, and detailed explanations of RCM on various goods and services, highlighting common confusions and exam-relevant scenarios.

Main Ideas, Concepts, and Lessons Conveyed

1. Introduction to Reverse Charge Mechanism (RCM)

RCM is a critical and frequently tested topic in GST exams.
Forward charge: Supplier pays GST to the government.
Reverse charge: Receiver pays GST directly to the government when the supplier cannot or it is difficult to collect from the supplier.
RCM is applied in specific notified cases to ensure government revenue.
Registration under GST is mandatory for the receiver if RCM applies, even if the receiver was previously unregistered.

2. General Principles of RCM

RCM applies regardless of the supplier’s registration status.
If the supplier is unregistered and the receiver is registered, the receiver must pay GST under RCM.
Input Tax Credit (ITC) can be claimed by the receiver on RCM paid.
The government aims to prevent revenue loss by targeting the receiver under RCM in certain transactions.

3. Important Sections and Entries Related to RCM

Sections 9(1), 9(2), 9(3), and 9(4) of the CGST Act discussed.
Sections 9(3) and 9(4) relate to reverse charge on notified goods and services.
Section 95 covers cases where neither supplier nor receiver pays tax; a third party (e.g., platform operators like Ola, Oyo) pays tax.

4. RCM on Specific Services and Goods

A. Goods Transport Agency (GTA) Services

GTA can opt to pay GST at 12% with ITC or 5% without ITC.
Service to registered persons: 12% forward charge (if opted).
Service to unregistered persons: 5% reverse charge applies.
If GTA service is silent on tax rate, assume reverse charge at 5%.
GTA services to government or unregistered persons are exempt (“empty”).

B. Renting of Motor Vehicles

Forward charge generally applies.
If renting includes fuel cost in consideration and supplier opts for 5%, and supplier is a small person (other than body corporate) and receiver is body corporate, then RCM applies.
Otherwise, forward charge applies.
Examples clarify when RCM applies based on supplier and receiver status.

C. Renting of Property

Two types: Residential and Commercial.
Residential property rented for personal use by unregistered persons is exempt (“empty”).
Commercial property renting:
- Supplier registered → forward charge.
- Supplier unregistered, receiver registered → RCM applies.
- Both unregistered → no tax.
Government as supplier renting commercial property to registered person → receiver pays tax under RCM.

D. Security Services

Supplier: Any person other than body corporate.
Receiver: Registered person.
RCM applies if receiver is registered.
If supplier registered under composition scheme or for TDS/TCS, forward charge applies.

E. Sponsorship Services

Supplier: Any person.
Receiver: Body corporate or partnership firm.
Tax under RCM if receiver is body corporate or partnership firm.

F. Legal Services

Tax under RCM if receiver is a registered business entity whose turnover exceeded threshold in the previous year.
If turnover threshold not exceeded in previous year, no RCM.
Includes services by advocates and arbitral tribunals.

G. Director’s Services

Services provided by a director to the company in directorship capacity → company pays tax under RCM.
Services in personal capacity → generally no RCM, depends on case.
Renting of property by director to company → RCM applies.

H. Insurance and Recovery Agents

Agent provides services to insurance company → company pays tax under RCM.
Recovery agent services to banks or NBFCs → bank/NBFC pays tax under RCM.

I. Copyright and Artistic Works

Tax under RCM when author supplies to publisher.
Exception: If author registers and submits declaration, forward charge applies.

J. Government Services

Generally exempt or “empty” when provided to unregistered persons.
Services by Department of Post and Ministry of Railways always forward charge.
Government renting commercial property to registered person → receiver pays tax under RCM.

K. E-Commerce Operators and Section 95

Platforms like Ola, Oyo, Urban Clap, and Swiggy pay tax under Section 95.
Neither supplier (driver, hotel, service provider) nor receiver (customer) pays tax.
Exception: If supplier is a company providing omnibus service, supplier pays tax forward.

L. Goods under RCM

Agricultural products like raw cotton, cashew nuts, bidi leaves, tobacco leaves supplied by farmers (unregistered) → receiver pays tax under RCM.
Essential oils (non-citrus) supplied by unregistered persons → receiver pays tax under RCM.
Lottery tickets distributed by government → agent pays tax under RCM.
Used vehicles sold by government to registered persons → receiver pays tax under RCM.
Metal scrap (amended provision):
- Supplier unregistered, receiver registered → receiver pays tax under RCM.
- Both registered → forward charge.
- TDS applicable on metal scrap transactions where receiver is registered.

5. TDS and TCS Implications

TDS deduction is mandatory where receiver is registered and paying under RCM.
Helps government track supplier’s turnover and prevent tax evasion.
TCS provisions linked with e-commerce operators paying tax under Section 95.

6. Registration Requirements

Compulsory registration if liable to pay tax under RCM, regardless of turnover.
Applies to receivers paying tax on behalf of unregistered suppliers.
Special provisions for GTA, metal scrap dealers, and other notified categories.

7. Exam Tips and Methodology

Understand supplier and receiver status (registered/unregistered, body corporate or not).
Memorize key entries where RCM applies.
Use charts and tables for clarity but avoid over-reliance.
Focus on practical examples and real-life scenarios.
Pause and think through examples during revision.
Practice questions repeatedly for mastery.
Pay special attention to amendments and recent notifications.

Methodology / Instructions for Study and Exam Preparation

Watch the revision video attentively without speeding up.
Pause the video to understand complex examples thoroughly.
Revise key topics multiple times to ensure retention.
Memorize the supplier-receiver combinations for RCM applicability.
Use charts and tables as quick reference tools but do not rely solely on them.
Practice questions and self-assess regularly.
Understand the logic behind RCM application rather than rote learning.
Keep updated with latest amendments and notifications.
Focus on tricky areas: GTA services, renting of motor vehicles, security services, sponsorship services, legal services, government services, e-commerce operators, and metal scrap.

List of Speakers / Sources Featured

CA Akshansh Garg – Primary speaker and instructor delivering the entire revision lecture.

This summary captures the essence of the detailed lecture on RCM under GST, focusing on conceptual clarity, practical examples, amendments, and exam-centric guidance provided by CA Akshansh Garg.