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.