RCM Goods Entries 5 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
These three entries have nothing in common commercially. They have everything in common analytically: each of them only works because a classification question was settled first — is a lottery ticket goods, is a government department a taxable person, is a PSLC a security?
Entry 5 — supply of lottery by a State Government, Union Territory or local authority to a lottery distributor or selling agent. Entry 6 — used vehicles, seized and confiscated goods, old and used goods, waste and scrap supplied by the Central Government , State Government, Union territory or a local authority to any registered person; Railways was carved out by Notification No. 19/2023-CT(Rate) w.e.f. 20.10.2023. Entry 7 — Priority Sector Lending Certificates supplied by any registered person to any registered person, inserted by Notification No. 11/2018-CT(Rate) w.e.f. 28.05.2018.
Entry 5: lottery, and the actionable claim question
The entry: supply of lottery by a State Government, Union Territory or any local authority to a lottery distributor or selling agent — the expression taking its meaning from clause (c) of Rule 2 of the Lotteries (Regulation) Rules, 2010, made under section 11(1) of the Lotteries (Regulation) Act, 1998.
The classification chain. Section 2(52) defines goods to mean every kind of movable property other than money and securities, but includes actionable claim, growing crops, grass and things attached to or forming part of the land agreed to be severed before supply. A lottery ticket is an actionable claim, and is therefore classified as goods — which is why the entry sits in the goods notification at all.
The 2023 recast of Schedule III. With effect from 01.10.2023, the CGST (Amendment) Act, 2023 notified through Notification No. 48/2023-Central Tax dated 29.09.2023 inserted section 2(102A) — "specified actionable claim" meaning the actionable claim involved in or by way of (i) betting; (ii) casinos; (iii) gambling; (iv) horse racing; (v) lottery; or (vi) online money gaming — and amended entry 6 of Schedule III to read "Actionable claims, other than specified actionable claims". Before the amendment it read "Actionable claims, other than lottery, betting and gambling".
The Handbook's deeper point about actionable claims is worth keeping. Goods have their own HSN codes, but where a "beneficial interest in movable property not in possession" involving such goods is transferred, they become an actionable claim under section 3 of the Transfer of Property Act, transfer of which is addressed in section 130 of that Act. Debtors in the books are transactions in money — but once those receivables are securitised and sold to ARCs, they become an actionable claim, and the applicable HSN has to be considered.
And there is a practical HSN problem the Handbook names. Where the tariff column of an RCM entry says "any chapter", that can be "very perplexing, especially when e-invoice is applicable that cannot be issued without specific HSN code." The Handbook's answer: taxpayers are liable to fall back on HSN 4907 00 90 for all documents of title that are actionable claims.
Two kinds of lottery, two mechanisms:
| Mechanism | |
|---|---|
| Lottery run by a State Government — Government supplies to the distributor or selling agent | Entry 5, RCM — the agent pays. Entry 149 of Notification No. 2/2017-CT(Rate) then exempts onward supply by any person other than Government, provided the lottery has suffered appropriate tax when supplied by Government to the distributor or selling agent. |
| Lottery authorised by a State Government — distributor to local agent, and local agent onward | Forward charge at each point of supply. No exemption is available here; tax must be paid by the distributor and by the local agent on each supply. |
Entry 6: used vehicles, scrap and confiscated goods from government
The entry: any chapter — used vehicles, seized and confiscated goods, old and used goods, waste and scrap — supplied by the Central Government , State Government, Union territory or a local authority, to any registered person.
Brought in w.e.f. 13.10.2017 by Notification No. 36/2017-CT(Rate) and Notification No. 37/2017-Integrated Tax (Rate).
The Railways exclusion. The words were substituted by Notification No. 19/2023-CT(Rate) dated 19.10.2023, w.e.f. 20.10.2023. The reason is the same one that moved Railways out of services Entry 5: on the GST Council's recommendation, supply of all goods and services by Indian Railways was moved to forward charge to enable Railways to avail ITC and reduce its cost. So from 20.10.2023, disposal of scrap by Indian Railways is not on reverse charge — Railways charges.
Circular No. 76/50/2018-GST dated 31.12.2018 answers the question the entry leaves open. Such supplies to a registered person are covered by the notifications and taxed on reverse charge. But such supplies to an unregistered person are equally taxable and are not covered by those notifications — so the circular clarifies that the Government department itself is liable to get registered and pay GST on intra-State and inter-State supply of used vehicles, seized and confiscated goods, old and used goods, waste and scrap made to an unregistered person, subject to sections 22 and 24.
A cess caution. The Handbook notes that "any chapter" here means the appropriate chapter applicable to the motor vehicles concerned, and that while considering RCM liability, the corresponding compensation cess notification must be referred to. A used vehicle bought at a government auction can carry a cess consequence that the tax rate alone does not disclose.
Entry 7: Priority Sector Lending Certificates
The entry: any chapter — Priority Sector Lending Certificate — supplied by any registered person to any registered person. Inserted by Notification No. 11/2018-CT(Rate) dated 28.05.2018, w.e.f. 28.05.2018.
This entry is unusual: both columns are "any registered person". It is not about an unorganised supplier at all; it is about a market between banks.
The classification chain, through four circulars:
Circular No. 34/8/2018-GST dated 01.03.2018 asked whether PSLCs are outside GST. Drawing on the RBI's own FAQ, it noted that a PSLC "may be construed to be in the nature of goods", dealing in which was notified as a permissible activity under section 6(1) of the Banking Regulation Act, 1949 by a Government of India notification dated 4 February 2016. Crucially: PSLCs are not securities. They are "akin to freely tradeable duty scrips, Renewable Energy Certificates, REP licence or replenishment licence, which attracted VAT." There being no exemption for trading in PSLCs, they were held taxable as goods at the residuary rate then applicable.
Circular No. 46/20/2018-GST dated 06.06.2018 then classified them: PSLCs fall under heading 4907.
Circular No. 62/36/2018-GST dated 12.09.2018 settled the mechanism for the transitional period: GST on PSLCs for 01.07.2017 to 27.05.2018 was payable by the seller bank on forward charge.
Circular No. 93/12/2019-GST dated 08.03.2019 confirmed the position going forward: GST on PSLC trading attracts reverse charge from 28.05.2018 onwards, and is payable by the buyer bank, under Notification No. 11/2018-CT(Rate).
Why the classification mattered. Had PSLCs been securities, they would have been outside both "goods" and "services" and there would have been no supply at all. The finding that they are goods, not securities, is the whole foundation of Entry 7.
Key takeaways
- A lottery ticket is an actionable claim and therefore goods — which is why Entry 5 sits in the goods notification.
- Section 2(102A) and the recast entry 6 of Schedule III (w.e.f. 01.10.2023) replaced "lottery, betting and gambling" with six specified actionable claims.
- Government-run lottery is RCM at the first leg, with entry 149 of Notification No. 2/2017-CT(Rate) exempting the onward chain if tax was suffered; a State-authorised lottery is forward charge at every point.
- Entry 6 covers government disposals of used vehicles, seized goods and scrap to a registered person; Indian Railways was excluded from 20.10.2023 and now charges forward.
- Where a government department supplies such goods to an unregistered person, the department must register and pay — Circular No. 76/50/2018-GST.
- PSLCs are goods, not securities — classifiable under heading 4907; forward charge until 27.05.2018, reverse charge on the buyer bank from 28.05.2018.
- Where the tariff column says "any chapter", e-invoicing still requires an HSN — the Handbook points to 4907 00 90 for documents of title that are actionable claims.
Read next
- Metal Scrap Under Reverse Charge: Entry 8 and the Three Notifications of October 2024
- RCM on Goods, Entries 1 to 4A: Where the Agriculturist Definition Does the Work
- RCM Entry 5: Government Services to a Business Entity
Disclaimer: Positions stated as on 5 September 2026, based on entries 5, 6 and 7 of Notification No. 4/2017-Central Tax (Rate) as amended by Notification Nos. 36/2017, 11/2018 and 19/2023-Central Tax (Rate), sections 2(52) and 2(102A) and Schedule III of the CGST Act, 2017, entry 149 of Notification No. 2/2017-Central Tax (Rate), and Circulars No. 34/8/2018-GST, 46/20/2018-GST, 62/36/2018-GST, 76/50/2018-GST and 93/12/2019-GST, as reproduced in the ICAI Handbook on Reverse Charge under GST (2nd edition, February 2025).
Key Facts About RCM Goods Entries 5
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
Why is lottery treated as goods?
Because a lottery ticket is an actionable claim, and section 2(52) includes actionable claims within the definition of goods.
Who pays GST on lottery supplied by a State Government?
The lottery distributor or selling agent, under Entry 5 of Notification No. 4/2017-CT(Rate).
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
RCM Goods Entries 5: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.