Services under reverse charge in GST with analysis
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This document summarizes 13 services that are subject to reverse charge mechanism under GST. It details the service provider, recipient of service, and percentage of GST payable. Some key services include legal services provided by advocates to businesses, services provided between related parties like directors and companies, and transportation services where the supplier or recipient is located outside of India. The reverse charge applies at 100% rate for most services, with the recipient business responsible for paying the tax instead of the supplier.
Services under reverse charge in GST with analysis
- 1. Sl. No. Service Provider of service Recipient of Service Percentage of service tax payable by any person other than the service provider Analysis 1 Taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory other than non-assessee online recipient (OIDAR) Any person who is located in a non- taxable territory Any person located in the taxable territory other than non-assessee online recipient (Business Recipient) 100% This clause covers only the B2B services provided by OIDAR. For B2C transaction he will have to take registration and comply with the GST law. 2 Services provided or agreed to be provided by a goods transport agency (GTA) in respect of transportation of goods by road Goods Transport Agency (GTA) (a) any factory registered under or governed by the Factories Act, 1948; (b) any society registered under the Societies Registration Act, 1860 or under any other law for the time being in force in any part of India; (c) any co-operative society established by or under any law; (d) any person registered under CGST/SGST/UTGST Act; (e) any body corporate established, by or under any law; or (f) any partnership firm whether registered or not under any law including association of persons. (g) Casual taxable person 100% Similar to existing provisions under Service tax 3 Services provided or agreed to be provided by an individual advocate or firm of advocates by way of legal services, directly or indirectly An individual advocate or firm of advocates Any business entity. 100% The word business entity is not defined under GST Law. So, it can be interpreted that in this case any entity engaged in business whether registered or unregistered is required to comply with reverse charge provisions. 4 Services provided or agreed to be provided by an arbitral tribunal An arbitral tribunal Any business entity. 100% The word business entity is not defined under GST Law. So, it can be interpreted that in this case any entity engaged in business whether registered or unregistered is required to comply with reverse charge provisions. 5 Sponsorship services Any person Any body corporate or partnership firm. 100% GST need to be paid irrespective of whether these are registered or unregistered. Analysis of services under reverse charge as approved by GST council on its meeting dt. 19 May 2017
- 2. 6 Services provided or agreed to be provided by Government or local authority excluding,- (1) renting of immovable property, and (2) services specified below- (i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government; (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; (iii) transport of goods or passengers. Government or local authority Any business entity. 100% Any entity engaged in business whether registered or unregistered is required to comply with reverse charge provisions. Except in the following cases: 1) Renting of immovable property; 2) Services provided by department of post 3)Services in relation to an aircraft or a vessel 4)Transportation of goods or passengers 8 Services provided or agreed to be provided by a director of a company or a body corporate to the said company or the body corporate; A director of a company or a body corporate A company or a body corporate. 100% Any salary paid to the director for the services as employee and as per terms of his employment is out of the preview of GST. However, if any siting fee or commission is paid over and other than as per the terms of his employment such amount will be covered under reverse charge. 9 Services provided or agreed to be provided by an insurance agent to any person carrying on insurance business An insurance agent Any person carrying on insurance business. 100% Similar to existing provisions under Service tax 10 Services provided or agreed to be provided by a recovery agent to a banking company or a financial institution or a non-banking financial company A recovery agent A banking company or a financial institution or a non- banking financial company. 100% In respect of services of recovery agent it is irrelevant whether he is registered or unregistered person. For such services banking co/financial institution/NBFC is liable to pay GST under reverse charge. 11 Services by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India A person located in non- taxable territory to a person located in non-taxable territory Importer as defined under clause (26) of section 2 of the Customs Act, 1962. 100% Any amount of freight paid by importer to any person located in the non taxable territory is for transportation of goods by vassal up to the customs station of clearance in India shall be covered by provisions of reverse charge and importer is liable to pay GST on such freight. 12 Transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works Author or music composer, photographer, artist, etc. Publisher, Music company, Producer 100% In case of transfer or permitting the use or enjoyment of a copyright, liability to pay GST shifted on Publisher, Music company, Producer as the case may be. 13 Radio taxi or Passenger Transport Services provided through electronic commerce operator Taxi driver or Rent a cab operator Any person 100% by Electronic Commerce Operator In this case service provider is taxi driver or rent a cab operator and service recipient in any person who book the cab through electron commerce operator such as Ola, Uber etc. So, liability to pay GST is on electronic commerce operator such as Ola, Uber etc.