On January 16, 2025, the Central Board of Indirect Taxes and Customs (CBIC) issued Notification No. 07/2025-Central Tax (Rate) to amend the applicability of the Reverse Charge Mechanism (RCM) on renting of immovable property services.
Key Amendment:
- Exclusion of Composition Taxpayers: The amendment specifies that RCM will not apply to composition taxpayers receiving renting of immovable property services from unregistered suppliers. Previously, all registered persons were liable under RCM for such services.
Implications:
- For Composition Taxpayers: They are now exempt from paying GST under RCM for renting of immovable property services, reducing their compliance burden.
- For Regular Registered Taxpayers: The obligation to pay GST under RCM for these services remains unchanged.
Regularization of Past Transactions:
Transactions from October 10, 2024, to January 15, 2025, involving composition taxpayers are regularized, ensuring no additional compliance or penalties.
This amendment aims to simplify GST compliance for small businesses under the composition scheme. Taxpayers should review their transactions to align with the updated provisions.
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