Supplier :- Any person other than body corporate (the words "other than body corporate" are added vide notification no 07/2025 dated 16th January 2025)
Recipient :- Any body corporate or a partnership firm located in the taxable territory.
If services by way of sponsorship is provided to any body corporate or a partnership firm located in the taxable territory then GST shall be paid by the recipient under RCM.
Meaning of "Sponsorship Services"
Sponsorship services refer to financial or in-kind support given by a company or firm to an event, activity, individual, or organization in return for promotional benefits.
These services include :-
Event sponsorship (sports, cultural, business events, etc.)
Corporate sponsorship of trade fairs, exhibitions, and summits
Sponsoring awards, TV shows, conferences, etc.
Brand endorsement where the entity gets recognition in return for financial support
If a sponsorship service is provided to an individual, a sole proprietorship, or an HUF (not a body corporate or partnership firm), then RCM does not apply. In such cases, the supplier must charge GST under Forward Charge (if registered under GST).
Examples :-
Example 1 :- Sponsorship of a Business Summit
ABC Pvt. Ltd. sponsors a business summit organized by XYZ Events LLP. Here both Supplier and recipient are body corporates. (Assuming LLP as body corporate as per our earlier discussion.). Hence RCM shall not apply and
supplier EXY Events LLP shall charge GST on forward charge.
Example 2 :- Sponsorship Provided by a Company to Another Company (RCM does not apply)
GHI Ltd. sponsors an IT conference organized by TechCorp Pvt. Ltd. Since the recipient and supplier both are body corporate, RCM does not apply.
Example 3 :- Sponsorship Provided by an Individual to a Company (Forward Charge Applies, No RCM)
Mr. Sharma (an individual) sponsors a startup networking event organized by MNO Pvt. Ltd. Since the sponsor is an individual and recipient is a body corporate RCM shall apply and MNO pvt ltd shall pay GST under RCM
Example 4 :- Sponsorship by a Government Department to a Corporate Entity (RCM Applies)
The State Tourism Department sponsors a travel expo organized by TravelEx Pvt. Ltd. Since the recipient is a company (TravelEx Pvt. Ltd.), RCM applies, and TravelEx Pvt. Ltd. must pay GST at 18% under RCM. The State Tourism Department does not charge GST on the sponsorship amount.