Notification No. 16/2018 – Integrated Tax (Rate) Explained

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Notification No. 16/2018 - Integrated Tax (Rate): Seeks to amend notification No. 10/2017- Integrated Tax (Rate) so as to specify services supplied by individual Direct Selling Agents (DSAs) to banks/ non-banking financial company (NBFCs) to be taxed under Reverse Charge Mechanism (RCM).

GST: [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GSR......(E).- In exercise of the powers conferred by sub-section (3) of section 5 of the IGST Act, 2017 (13 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.10/2017- Integrated Tax (Rate), dated the 28^th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 685(E), dated the 28^th June, 2017, namely:-

In the said notification, -

in the Table, after serial number 12 and the entries relating thereto, the following serial number and entries shall be inserted, namely: -

(1)	(2)	(3)	(4)
“13	Services supplied by individual Direct Selling Agents (DSAs) other than a body corporate, partnership or limited liability partnership firm to bank or non-banking financial company (NBFCs)	Individual Direct Selling Agents (DSAs) other than a body corporate, partnership or limited liability partnership firm.	A banking company or a non-banking financial company, located in the taxable territory.”;

in the Explanation, after clause (f), the following clause shall be inserted, namely: -

‘(g) “renting of immovable property” means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property.’.

2. This notification shall come into force with effect from 27^th of July, 2018.

(Gunjan Kumar Verma)
Under Secretary to the
Government of India

Note: -The principal notification No. 10/2017 - Integrated Tax (Rate), dated the 28^th June, 2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 685 (E), dated the 28^th June, 2017 and was last amended by notification No. 3/2018 - Integrated Tax (Rate), dated the 25^th January, 2018 vide number G.S.R. 71 (E), dated the 25^th January, 2018.

📚 Frequently Asked Questions (FAQs): Notification No. 16/2018 – Integrated Tax (Rate)

Q1: What is Notification No. 16/2018 – Integrated Tax (Rate)?

Answer:
It brings services supplied by individual DSAs to banks/NBFCs under Reverse Charge Mechanism. 16

Q2: From when is this applicable?

Answer:
From 27 July 2018. 16

Q3: Who pays GST under this notification?

Answer:
The bank or NBFC (recipient) pays GST under RCM.

Q4: Does DSA need GST registration?

Answer:
If only supplying to banks under RCM and no other taxable supply, registration may not be required (subject to turnover).
Need help?
👉 https://finodha.in/online-gst-registration/

Q5: Does this apply to DSA company?

Answer:
No. Only individual DSAs (not body corporate/LLP/partnership).

Q6: What is the relevant legal section?

Answer:
Section 5(3) of IGST Act. 16

Q7: Can bank claim ITC?

Answer:
Yes, subject to Section 16 ITC conditions.

Q8: Is commission taxable?

Answer:
Yes, but tax paid by bank under RCM.

Q9: What about inter-State DSA services?

Answer:
IGST under RCM will apply.

Q10: Does this apply to NBFC also?

Answer:
Yes, explicitly covers NBFCs. 16

Q11: What if DSA wrongly charges GST?

Answer:
Double taxation risk; proper correction required.

Q12: Is TDS under GST applicable?

Answer:
Depends on whether bank qualifies under Section 51.

Q13: How to show RCM in GST return?

Answer:
Reported in GSTR-3B under reverse charge section.

Q14: Does this affect income tax?

Answer:
No direct change, but income must be reported in ITR.
👉 File ITR here: https://finodha.in/income-tax-return-filing-online/

Q15: Where to get GST expert advice?

Answer:
Consult Finodha GST Experts:
https://finodha.in/gst-compliance/

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