Question ID :
44848
GST applicability on royalty charges for excavation
Dear Members, a client is paying yearly royalty of Rs.75,000 to the govt dept. for excavation of quarries. His annual turnover is around 10-12L. Is he liable to pay GST RCM on royalty charges? Does he needs to obtain GST Registration? If so, does he have to pay GST on his annual turnover also? Pls elaborate.
Posted by
Ajith Kumar K
on
May 05, 2025
Filed Under
GST
I suppose your client is paying the royalty to the State Government and is not paying any rentals to the State Govt. In which case, there is an exemption entry vide Sl.No 7 of the Exemption Notification 12/2017-CT(R) as amended from time to time, which provides for the following
"Services provided by the Central Government, State Government, Union territory or local authority to a business
entity with an aggregate turnover of up
to [such amount in the preceding financial year as makes it eligible for exemption from registration under the Central Goods and Services Tax Act, 2017 (12 of 2017)]."
Based on this exemption, the services provided by the State Govt to your client is exempt and there would be no requirement to discharge GST under RCM and because your clients turnover is less than specified threshold limit for obtaining the GST registration, there is no requirement to obtain the GST registration when the Royalty is paid to State Govt.
However, the above said exemption do not apply to the services by way of renting of immovable property by State Govt. In which case, GST on the lease rentals shall be paid under RCM and also GST registration shall be obtained irrepsctive of the threshold for registration. Hope this clarifies your query, Feel free to revert on thulasiram@hnaindia.com.
Posted by
SREENIVASULU THULASIRAM on
May 06, 2025