Reverse Charge Mechanism (RCM) Applicability Lookup

Common questions

What is reverse charge mechanism in GST?

Under RCM, the recipient (not the supplier) pays GST to the government. RCM applies to specific notified categories (Section 9(3)) and to purchases from unregistered suppliers in some cases (Section 9(4)). The recipient also issues a self-invoice and a payment voucher.

Which services attract RCM?

Common ones: Goods Transport Agency (5% or 12%), legal services from advocates to business entities, sponsorship services, services from a director to the company, security services, renting of motor vehicles, and services from a government department to a business entity.

Do I need to issue a self-invoice for RCM?

Yes, when the supplier is unregistered. The recipient issues a self-invoice on the date of receipt and a payment voucher on the date of payment. Both are mandatory record-keeping documents under Section 31(3)(f) and (g).

What is the time limit to issue an RCM self-invoice?

Rule 47A of the CGST Rules (Notification 20/2024, effective 1 November 2024) requires the recipient to issue the self-invoice within 30 days of receiving the supply from an unregistered person. A delay can attract interest at 18% per annum.

Can I claim ITC on GST paid under reverse charge?

Yes, provided the inward supply is used for business and is not blocked under Section 17(5). You pay the RCM tax in cash and then claim it as ITC in the same or a later period.

Does RCM apply to all purchases from unregistered dealers?

No. Under Section 9(4), RCM on unregistered purchases applies only to notified categories (for example specified goods, and promoters in real estate). It is not a blanket charge on every unregistered purchase.