Reverse Charge Mechanism (RCM) in GST: Complete List & Examples
Under RCM the buyer pays the tax. Learn the notified services, the ₹5,000 rule history and how to show RCM on an invoice.
What is reverse charge
Normally the supplier collects and pays GST. Under Section 9(3) and 9(4), for notified supplies the recipient pays the tax directly to the government and can then claim ITC.
Notified supplies
Goods transport agency services, legal services by advocates, sponsorship, director's services to a company, security services, renting of motor vehicles to a body corporate, import of services, and purchases by promoters from unregistered vendors above 20% of inputs.
Invoice and self-invoice
The supplier's invoice must state 'Tax payable on reverse charge: Yes'. If the supplier is unregistered, the recipient issues a self-invoice and a payment voucher.
Reporting
RCM liability goes in Table 3.1(d) of GSTR-3B and must be paid in cash (not via ITC). The corresponding ITC is claimed in Table 4A(3).
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Create a free accountKeywords: reverse charge mechanism list · rcm gst example. This article is general information, not professional tax advice.
