Under RCM, the recipient of goods/services pays GST instead of the supplier. Section 9(3) lists specific supplies (legal, GTA, directors, security), while Section 9(4) covers purchases from unregistered dealers (currently suspended for most items). RCM requires mandatory registration, cash payment, and self-invoicing.
| Supplier | Recipient (Liable) | GST Rate |
|---|---|---|
| Goods Transport Agency (GTA) | Factory, society, registered person, body corporate | 5% (no ITC) or 12% (with ITC) |
| Legal services (Advocates/Law firms) | Any business entity | 18% |
| Sponsorship services | Body corporate or partnership firm | 18% |
| Director services (non-employee) | Company or body corporate | 18% |
| Security services (manpower) | Registered person (body corporate) | 18% |
| Renting of motor vehicle (non-body corporate) | Body corporate | 5% (no ITC) |
| Recovery agent services | Banking company / NBFC | 18% |
| Author/Music composer/Photographer | Publisher, music company | 18% |
| Insurance agent | Insurance company | 18% |
Threshold: Supply value > ₹5,000 per day from a single supplier
Status: Suspended via Notification 38/2017-CT(R) from 13.10.2017. Currently NOT applicable
Government suspended Section 9(4) indefinitely — no RCM on purchases from unregistered dealers
Threshold: Cashew nuts, bidi wrapper leaves, tobacco leaves, silk yarn, raw cotton, supply of used vehicles/seized goods
Status: Active — these specific goods attract RCM even from unregistered suppliers
Added by various notifications — check latest for current list
Check if the supply falls under Section 9(3) notified list or Section 9(4) provisions. Verify supplier and recipient categories.
Recipient must issue a self-invoice (payment voucher) for the supply received under RCM. This is mandatory for ITC claims.
Report and pay GST in GSTR-3B under the 'Tax payable under RCM' section. Payment must be in cash — ITC cannot be used for RCM liability.
After paying RCM GST, claim ITC in the same GSTR-3B return. Net cash outflow is zero (pay RCM → claim ITC), but you must pay in cash first.
Report RCM supplies received in Table 4B of GSTR-3B. Report self-invoices in GSTR-1 if applicable.
Under normal GST, the supplier collects and pays tax. Under RCM (Reverse Charge Mechanism), the RECIPIENT of goods/services is liable to pay GST instead of the supplier. RCM applies in two scenarios: (1) Section 9(3): Government-notified supplies (e.g., legal services, GTA, director fees), and (2) Section 9(4): Purchases from unregistered persons (currently suspended for most items).
No. RCM GST must be paid in CASH only — you cannot use your Input Tax Credit balance to pay RCM liability. However, after paying RCM in cash, the amount becomes eligible for ITC claim in the same return period. So the net effect on your cash flow is temporary: pay in cash → claim ITC → use that ITC for future output tax.
No. Section 9(4) which required RCM on all purchases from unregistered persons exceeding ₹5,000/day has been SUSPENDED by the government since October 2017 (Notification 38/2017). However, RCM on specific notified goods from unregistered dealers (cashew nuts, silk yarn, tobacco leaves, etc.) remains active under separate notifications.
Yes, if you receive supplies under RCM, you may need to register for GST regardless of your turnover. Section 24 of CGST Act mandates compulsory registration for persons required to pay tax under RCM. The ₹20/40 lakh threshold exemption does NOT apply to RCM recipients.
In GSTR-3B: Report RCM liability in Table 3.1(d) and pay in cash. Claim ITC in Table 4(A)(2). In GSTR-1: Report self-invoices for RCM. In GSTR-2B: Verify RCM ITC auto-populated from supplier data. The key document is the self-invoice or payment voucher — without it, ITC on RCM cannot be claimed.
Tag vendors as RCM-liable, auto-generate self-invoices, and compute RCM tax in GSTR-3B. Zero manual effort.
Start Free Trial