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GST UNDER RCM ON ROYALTY PAID BY GOVT. CONTRACTOR.

08 August 2021

A Government Contractor engaged in construction of Roads, Govt. buildings. The government deducts Royalty among other deductions from Gross Bill Value. The same is also shown in P&L account on expense side. Whether GST under RCM is payable on Such Royalty and if Yes at What Rate.
provide notification also.

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8 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 08 August 2021

No I think RCM is not applicable

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NEETISH KUMAR (17 Points)
Replied 08 August 2021

As per Entry No. 5 of Notification No. 13/2017 – Central Tax (Rate) dated 28th June 2017, on services supplied by the central government, state government, union territory or local authority to a business entity, GST shall be paid by the business entity as a service recipient. However, there are certain exemptions available for the services supplied by the government.

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 08 August 2021

Yes RCM Applicable.

GST Rate Applicable:
As per entry No. 17 of Notification No. 11/2017 - CT (rate) for the transfer of the right to use any goods for any purpose, the GST rate as is applicable for the supply of like goods involving transfer of title in goods shall be charged.

The GST shall be the same of Principal goods or services suppliied.

Rajendra Prasad (Employee Private) (1867 Points)
Replied 08 August 2021

Notification No.11/2017 - central Tax will not represent about of GST payable Under RCM. Regarding GST payable under RCM Notification No.13/2017 - Central Tax only represent.
Here in Notification No.13/2017- Central Tax Rate, has explained any services provided by the Central Government, State Government and Local authority to a business entity only such expenditure will covers RCM.

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 09 August 2021

dear 99rajendra

Notification 13/2017 ct prescribe the services on which the RCM is applicable but for the Rate you need to refer the Notification 11/17 ct (r) only.

Royalty contractual payment by a person for the use of assets belonging to another person & its transfer of title in goods , so rate for the same is prescribed in said notification

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ANWAR WAHEED (partner) (22 Points)
Replied 01 November 2021

Q1. One of our Client is a Government Contractor engaged in construction of Roads. The government deducts Royalty among other deductions from Gross Bill Value. Whether GST on RCM is payable on Such Royalty and if Yes at What Rate.

Q2. Stone Quarries (Mining) whether gst is applicable in RCM. & Stone jelly, size stones used for government works contract also under RCM, if yes at what rate is applicable?

Radheshyam Tapade (Proprietor) (28 Points)
Replied 23 October 2022

A Government Contractor engaged in construction of Roads. The government deducts Royalty among other deductions from Gross Bill Value.

GST under RCM is not applicable in this situation because there is no supply of services to the contractor from Government. Also it is very important to note that Contractor is liable to pay GST on Gross amount including royalty hence contractor has already discharged his tax liability in FCM therefore no RCM.

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God juice (2 Points)
Replied 16 January 2024

Contractor pays GST on receipt (net amount payable ) from Govt contract. Which is the value arrived after deducting all the deductions including Royalty..