GST RCM on payment of International court of arbitration and

Hi Jagan,

Regarding GST RCM on payment to International Court of Arbitration for a foreign project, here’s a detailed explanation:

1. Applicability of RCM on payment to International Court of Arbitration

• The International Court of Arbitration (ICA) is a foreign entity providing arbitration services.

• Since the service provider is located outside India, and the recipient (you) is in India, it qualifies as an import of service.

• As per GST law, import of services attracts Reverse Charge Mechanism (RCM).

• You (the recipient) are liable to pay GST under RCM on the value of arbitration services received.

2. GST Rate and Classification

• Arbitration services generally fall under SAC 9986 (Legal Services).

• GST rate applicable is 18% under RCM on such imported services.

3. Availability of Input Tax Credit (ITC)

• Even though the project is a foreign project and you may have no output supply in India, GST on imported services paid under RCM is eligible for Input Tax Credit, subject to conditions.

• You can claim ITC on GST paid under RCM if:

  • You are registered under GST,

  • The services are used in the course or furtherance of your business,

  • You have valid tax payment and invoice documents,

  • You have filed your GST returns properly.

4. No output GST on foreign project

• Since your project is outside India and not subject to GST on output, you may have a zero-rated supplysituation.

• ITC on RCM paid GST can still be claimed and utilized against GST liabilities in India.

• If no output liability arises, you may seek refund of unutilized ITC as per GST rules (subject to eligibility).

Summary: