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RCM - Rent paid to director

17 July 2023

Hello All!

If private company pays rent to Director who owns the business premise.

Does GST Under RCM applicable to private company??

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10 Replies

Rohit Bhatia (Accounts Service) (331 Points)
Replied 18 July 2023

Yes applicable

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 18 July 2023

No, RCM not applicable.

pooja Kotak (34 Points)
Replied 18 July 2023

If applicable where it is written??

Nilkesh Parmar (106 Points)
Replied 18 July 2023

Not applicable

Vikash Tailor (13 Points)
Replied 19 July 2023

Yes Applicable

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pooja Kotak (34 Points)
Replied 19 July 2023

Hello pls tell where it's written?

Rajendra Prasad (Employee Private) (1867 Points)
Replied 20 July 2023

Director is renting Business premises as a land lord not as a Director. Hence there is no GST payable under RCM. If he is registered under GST Act, he has to pay GST on the rent collected along with GST.

To under stand this various GST provisions, Notifications has to be studied.

Pranjal Gupta (141 Points)
Replied 20 July 2023

In some countries, when a private company pays rent to a director who owns the business premise, it may be subject to the Goods and Services Tax (GST) under the Reverse Charge Mechanism (RCM). RCM is a mechanism where the liability to pay GST is shifted from the supplier to the recipient of goods or services.

Under RCM, the recipient of the service (in this case, the private company) is required to calculate and pay the GST on behalf of the supplier (the director). This is different from the usual scenario where the supplier collects and pays the GST.

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 20 July 2023

No more Different Scenario in this.

GST not applicable for the Rent paid to Director...

Nisarg J (4 Points)
Replied 21 July 2023

No, GST under RCM is not applicable if the director of a private company provides immovable property on rent to a private company.

Following is the Proof, Circular clarifying the same might follow soon.....

official Link: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1938812

Recommendations of 50th meeting of GST Council

Extract:

It has been decided to clarify that services supplied by a director of a company to the company in his private or personal capacity such as supplying services by way of renting of immovable property to the company or body corporate are not taxable under RCM. Only those services supplied by a director of company or body corporate, which are supplied by him as or in the capacity of director of that company or body corporate shall be taxable under RCM in the hands of the company or body corporate under notification No. 13/2017-CTR (Sl. No. 6) dated 28.06.2017.