IS RCM IS APPLIED ON RAILWAY OR NOT

As of October 20, 2023, the rules for GST on Indian Railways (IR) have significantly shifted to favor the Forward Charge Mechanism (FCM) to allow the Railways to claim Input Tax Credit (ITC). 

1. Current Rule (Since Oct 20, 2023)

The Ministry of Railways has moved almost all outward supplies from the Reverse Charge Mechanism (RCM) to the Forward Charge Mechanism (FCM). 

FCM is applied when: Indian Railways provides services like freight (transportation of goods) or passenger travel (AC and First Class) to any customer. Under this:

Railways collects the GST directly from you.

Railways pays that tax to the government.

The Customer (if registered) can claim ITC on the GST paid.

RCM is applied when: Practically no longer used for standard railway outward services like freight and passenger travel. Previously, certain services like renting of immovable property to registered persons were under RCM, but these have also largely transitioned to FCM as per recent CBIC notifications. 

indianrailways.gov.in

2. Summary Comparison

Feature Forward Charge (FCM) - Current Standard Reverse Charge (RCM) - Previous/Exceptions

Who Pays Tax? Indian Railways (Supplier) The Customer (Recipient)

Applicability Transportation of goods/passengers and most other services Specific services provided by Govt (excluding Railways since Oct 2023)

GST Rate Usually 5% for freight and AC/First Class travel Not applicable to IR outward services anymore

Note for Businesses: If you are a registered business entity and receive services from Indian Railways, check your invoice. You should see a GST amount added by the Railways, which they will remit to the government under FCM.