Q. gst on managemnt consultancy on retainership basis

Question

Hello

We are hiring a management consultant on retainership basis @ 1.5 Lakh per month.

Is he required to charge gst on the same or if not , are we supposed to pay gst on reverse charge basis for the same .(note that we are partnership firm registered with gst)

Answer 1

You are hiring a management consultant on a retainership basis and assuming the consultant is registered under GST, the consultant is required to charge GST on the monthly retainership fee of 1.5 Lakh. You, as a partnership firm registered under GST, are liable to pay the GST charged by the consultant. The Reverse Charge Mechanism would not apply in this scenario unless the consultant is not registered under GST and specific conditions are met that would necessitate the application of RCM under Section 9(4), which is less common for professional services like management consultancy.

Therefore, you should expect the management consultant to charge GST on their invoice for the retainership services provided. Ensure that the consultant provides you with a tax invoice that clearly mentions the GST charged, which you can then claim as an input tax credit (ITC), subject to the fulfillment of conditions specified under the GST law for ITC eligibility.

Regards, CA. Praveen Sharma

www.linkedin.com/in/capraveensh