Question:RCM is payable on security charges, but it is paid on net of deduction for food and transportation? RCM is payable on full value and recovery of food and transportation should be charged by company to security agency on forward charge.
Answer: RCM is only a concept whereby the liability to pay the GST is shifted from the supplier to the recipient. In no manner the valuation or any other aspect of the tax is affected or changed when such tax is paid under reverse charge mechanism. Thus, as per section 15(2) of the CGST Act, 2017, any obligation of the supplier when paid by the recipient shall be included in the taxable value of the supply. In this case the food and transportation of the security personnel appears to be the lability of the Security Agency as the same is debited from the payment made to the Security Agency (as the Querist has mentioned net of deduction payment) and thus, in our humble opinion, such payment will be included for the purpose of computation of taxable value on which RCM is payable.
