## RCM on Insurance Agent, Recovery Agent & DSA Services

### (a) Insurance Agent Services

Services by a licensed insurance agent to any person carrying on insurance business in taxable territory → RCM (insurance company pays GST).

### (b) Recovery Agent Services

Services by a recovery agent to a Banking Company / Financial Institution / NBFC in taxable territory → RCM (recipient bank/FI/NBFC pays GST).

If recovery agent services are provided to any other person, normal FCM applies.

### (c) Direct Selling Agent (DSA) Services

Services by an Individual DSA (other than body corporate, partnership firm, or LLP) to a Banking company / NBFC → RCM.

Important: If DSA is a firm, company, or LLP - FCM applies (not RCM).

### Summary Table

Service Provider	Recipient	Mechanism
Insurance Agent (licensed)	Insurance company	RCM
Recovery Agent	Bank/FI/NBFC	RCM
Recovery Agent	Any other person	FCM
Individual DSA	Bank/NBFC	RCM
Firm/Company/LLP DSA	Bank/NBFC	FCM

Worked example

### Example 1

Insurance Agent: Mr. Govind sold a LIC policy and received ₹ 7,000 commission from LIC.

→ Tax payable under RCM by LIC.

### Example 2

Recovery Agent (FCM case): Mr. Ram (recovery agent) provides service to Mr. Lalaji for recovering his loan, received ₹ 20,000.

→ Tax payable under FCM by Mr. Ram (recipient is not a bank/FI/NBFC).

### Example 3

Recovery Agent (RCM case): Mr. Ram provides service to SBI Bank for recovering bank loan, received ₹ 20,000.

→ Tax payable under RCM by SBI Bank.

### Example 4

DSA (RCM): Mr. Hari (individual DSA) provides service to SBI Bank, received ₹ 20,000.

→ Tax payable under RCM by SBI Bank.

### Example 5

DSA (FCM): RSA firm (DSA) provides service to SBI Bank, received ₹ 20,000.

→ Tax payable under FCM by RSA firm (DSA is not an individual).

⚠️ Common exam mistakes

Applying RCM on DSA services provided by firm/LLP - RCM applies only to individual DSAs
Applying RCM on recovery agent services provided to non-bank entities - RCM applies only when recipient is bank/FI/NBFC
Forgetting that the insurance agent must be 'licensed' for the RCM entry to apply

Bare-Act text Entries 7, 8 and 11 of Notification 13/2017-CT(R) · Notification No. 13/2017-CT(R) dated 28.06.2017 · click to expand

Services supplied by an insurance agent to any person carrying on insurance business; Services supplied by a recovery agent to a banking company or a financial institution or a non-banking financial company; 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 (NBFC) - tax shall be paid on reverse charge basis.

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RCM - Services by Insurance Agent, Recovery Agent and DSA

Worked example

⚠️ Common exam mistakes