Reverse Charge (RCM) Under GST — Who Pays?

The recipient pays. Under RCM the supplier does not charge GST on the invoice; instead the registered recipient self-assesses the tax, pays it to the government through the electronic cash ledger, and reports it in Table 3.1(d) of GSTR-3B. The supplier issues an invoice marked "tax is payable on reverse charge basis".

Under forward charge (the normal rule) the supplier collects GST from the buyer and pays it to the government. Under reverse charge the responsibility shifts to the recipient, who pays the tax directly. RCM is applied only to specific notified supplies or to certain supplies from unregistered persons.

Key services under Notification 13/2017-CT(R) include Goods Transport Agency (GTA) freight, legal services by an advocate or firm, services by a director to the company, security (manpower) services, renting of a passenger motor vehicle to a body corporate, insurance agent and recovery agent services, services by an author or music composer, and import of services. The exact recipient category is notified for each service.

Yes. The default for Goods Transport Agency freight remains 5% under RCM, paid by the recipient (factory, society, company, firm, body corporate or registered person). Under GST 2.0 from 22 September 2025 a GTA can instead opt for 18% forward charge with full ITC, which replaced the earlier 12% option. If the GTA has not opted for forward charge, the recipient pays 5% RCM.

A short notified list under Notification 4/2017-CT(R) — mainly agricultural produce bought from an agriculturist: cashew nuts (not shelled/peeled), bidi wrapper (tendu) leaves, tobacco leaves, raw cotton and silk yarn, plus used vehicles and old/used goods supplied by government, and Priority Sector Lending Certificates.

Yes. Following the 55th GST Council, sponsorship services supplied by a body corporate were moved from reverse charge to forward charge with effect from 16 January 2025 — so the body-corporate supplier now charges GST normally. Sponsorship supplied by other persons to a body corporate or partnership firm may still attract RCM, so confirm the exact fact pattern.

No. The broad Section 9(4) RCM on all purchases from unregistered suppliers was suspended long ago. Today it is notified only for specific cases — chiefly a real-estate promoter who must buy 80% of inputs from registered suppliers and pay RCM on the shortfall (and on cement/capital goods from unregistered suppliers). Ordinary businesses do not pay RCM on every purchase from a small unregistered vendor.

Yes, for supplies received from an unregistered person on which you pay RCM, you must issue a self-invoice and, on payment, a payment voucher. This self-invoice is the document that supports your Input Tax Credit claim on the RCM tax paid.

Yes, in most cases. A registered recipient who pays GST under RCM can claim it as Input Tax Credit in the same tax period the tax is paid, provided the supply is used for business, the recipient is not a composition dealer, and the credit is not blocked under Section 17(5). The self-invoice (for unregistered purchases) or the supplier invoice supports the claim.

No. RCM liability must always be discharged in cash through the electronic cash ledger — you cannot set it off using the balance in your electronic credit (ITC) ledger. After paying in cash you may then claim that tax back as ITC in the same GSTR-3B, if you are eligible.

Yes. Even a composition dealer must pay GST under RCM on inward supplies that attract reverse charge, at the normal (not composition) rate. However, a composition dealer cannot claim Input Tax Credit on the RCM tax paid — it becomes a cost.

Report the outward RCM liability on inward supplies in Table 3.1(d) of GSTR-3B (covering both registered and unregistered suppliers), pay it in cash, and then claim the eligible Input Tax Credit in Table 4(A)(3). Keep the supplier invoices marked for reverse charge, plus any self-invoices for unregistered purchases.

Yes. Import of services for a business purpose — including from an associated enterprise — is liable to IGST under reverse charge. The Indian recipient must self-assess and pay IGST under RCM and can claim it as ITC if used for business and not blocked.

For services under RCM, the time of supply is the earlier of the date of payment or 60 days from the date of the supplier's invoice. For goods under RCM, it is the earliest of the date of receipt of goods, the date of payment, or 30 days from the date of the supplier's invoice.

Yes. A supplier making a supply liable to reverse charge must state "tax is payable on reverse charge basis" on the invoice and must not charge GST on it. The recipient then self-assesses and pays the tax under RCM.