GST-RCM not applicable for sponsorship services provided by a body corporate-Notification issued!

CBIC issued Notification No.  07/2025 - Central Tax (Rate) on 16^th January 2025 which brings sponsorship services by a body corporate in the Forward Charge Mechanism. Earlier, RCM applied to Services provided by way of sponsorship by any person to any body corporate or partnership firm. 

Let’s understand the change!

Notification No.  07/2025 - Central Tax (Rate) dated 16.01.2025

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MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

Date: 16.01.2025

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Notification No. 07/2025 - Central Tax (Rate)

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G.S.R. 44(E).- In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification number 13/2017-Central Tax (Rate), of the Government of India, in the Ministry of Finance (Department of Revenue), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 692(E), dated the 28th June 2017, namely:-

In the said notification, in Table,-

(A) Against serial number 4, in column (3), after the words "Any person", the words "other than a body corporate" shall be inserted.

(B) Against serial number 5AB, in column (4), after the words "Any registered person", the words "other than a person who has opted to pay tax under composition levy" shall be inserted.

[F. No. 190354/2/2025-TO (TRU-II)]

MD. ADIL ASHRAF, Under Secy.

Note:-The principal notification number 13/2017 -Central Tax (Rate) was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 692 (E), dated the 28th June, 2017 and was last amended vide notification no. 09/2024 -Central Tax (Rate) published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 623(E), dated the 08th October 2024.

Key Highlights

• RCM is not applicable if a body corporate provides sponsorship services to another body corporate or partnership firm.
• In such case, if such a body corporate is registered under GST, it shall pay GST under forward charge on such services.
• However, if sponsorship is provided by a person other than body corporate, RCM is applicable.
• This change is applicable w.e.f. 16.01.2025.

Conclusion

In conclusion, the issuance of Notification No. 07/2025 - Central Tax (Rate) marks a significant shift in the tax treatment of sponsorship services under GST. With the removal of RCM for sponsorship services provided by a body corporate, the responsibility of paying GST now falls under the forward charge mechanism. This change brings clarity and simplifies compliance for corporate entities offering sponsorship services. Businesses must ensure they update their invoicing and tax processes to align with this notification, effective from January 16, 2025. 

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