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I have a query regarding RCM on rent for restaurant.
My client runs a restaurant and they are not availing any ITC, therefore they are charging 5% GST on invoices.
Is it mandatory for them to pay RCM on rent @ 18%?Incase they pay RCM then they wont be utilize it and it would be a huge loss as the rent is high.
Yes, RCM @18% on rent is mandatory if the landlord is unregistered and the restaurant is a registered person, as per Notification No. 13/2017 – Central Tax (Rate), as amended till date.
Even though the restaurant is charging 5% GST without availing ITC under Notification No. 11/2017 – Central Tax (Rate) (as amended), the RCM liability on rent still applies. Furthermore, ITC of GST paid under RCM cannot be claimed, resulting in an additional cost.
There is no exemption from RCM solely on the ground that ITC is not being availed.
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