RCM on Rent for Composite Dealer, Goods and Services Tax - GST

[Praveen VR]

We have Clients who are composite dealers, hence cannot claim Input Tax Credit. With the RCM on Rent rule being incorporated, Should we still pay this (RCM on rent) without having any chance of adjustment against outward tax liability payment. If we pay this RCM payment, is there any chance of recovery or do we have an exemption for Composite dealers from paying RCM on rent

Posts / Replies

[Sadanand Bulbule]

Dear querist

The definition of " Input tax" under Section 2[62] [b], reproduced below, also includes tax payable under RCM.

(62) “input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes–

(a) XXXX

(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;

In view of such inclusive definition, the composition dealers opting to pay tax under Section 10 are not entitled either to recover it or exempt from paying rent under RCM. In fact, rent paid under RCM becomes the cost of establishment..