RCM Under Real Estate Sector
RCM Under Real Estate Sector A reverse charge is a tax mechanism by which the supplier of goods or services (i.e., the vendor) will be held accountable for collecting the applicable taxes from their customers, instead of vice versa. In the Indian context, reverse charge refers to a situation when one entity has to pay tax on behalf of another. The Reverse Charge Mechanism RCM on real estate was introduced by the Finance Act 2017 and came into effect on 1st June 2018 with an objective to reduce tax avoidance in Real Estate Industry and improve compliance. The objective of RCM is to bring routine transactions within the scope of GST and make all related entities jointly accountable. With this new law, now buyers will have to take responsibility for paying taxes on new constructions, rather than suppliers such as vendors or contractors. What is Reverse Charge Mechanism RCM Real Estate ? The real estate sector is one of the major sectors for generating black money and for avoiding taxes i