Pick a supply below and this free CA-built tool tells you whether GST is payable under reverse charge, who pays, the rate, whether you can claim input tax credit, and whether a self-invoice is needed – updated for the 2024-25 changes (metal scrap, renting of commercial property, sponsorship).
RCM Applicability Checker
A quick guide based on the current notifications – confirm the specific facts of your case, as several entries have conditions.
What is the reverse charge mechanism (RCM)?
Normally the supplier collects GST and pays it to the government (forward charge). Under the reverse charge mechanism, the recipient of the goods or services pays the GST directly instead. RCM applies in three situations: (1) specific goods and services notified under Section 9(3) of the CGST Act; (2) certain supplies received from unregistered suppliers under Section 9(4) (mainly real-estate promoters); and (3) import of services. The recipient pays the tax in cash, issues a self-invoice and a payment voucher where the supplier is unregistered, and can then claim input tax credit if the supply is used for business and is not blocked.
Recent changes you should know
RCM on services – quick reference
| Service | Who pays under RCM | Rate |
|---|---|---|
| Goods Transport Agency (road transport of goods) | Specified recipient (registered person, body corporate, factory, society, etc.) | 5% |
| Legal services by an advocate / firm / senior advocate | Business entity recipient | 18% |
| Arbitral tribunal | Business entity | 18% |
| Sponsorship (sponsor not a body corporate) | Body corporate / partnership firm | 18% |
| Director’s services (not as employee) | Company / body corporate | 18% |
| Government / local authority services (with exceptions) | Business entity | 18% (varies) |
| Renting of motor vehicle (non-body-corporate at 5%) | Body corporate | 5% |
| Security services (supplier not a body corporate) | Registered recipient | 18% |
| Insurance agent | Insurance company | 18% |
| Recovery agent | Bank / FI / NBFC | 18% |
| Direct Selling Agent (individual / firm) | Bank / NBFC | 18% |
| Author / composer / artist copyright | Publisher / music company | 12% / 18% |
| Renting of a residential dwelling to a registered person | Registered tenant | 18% |
| Renting of commercial property by an unregistered person to a registered person (new) | Registered tenant | 18% |
| Import of services | Recipient in India | As applicable |
RCM on goods – quick reference
| Goods | Who pays under RCM | Rate |
|---|---|---|
| Metal scrap – unregistered to registered (new, 10 Oct 2024) | Registered recipient | 18% |
| Cashew nuts (raw), tobacco leaves, bidi wrapper (tendu) leaves | Registered recipient | 5% (varies) |
| Raw cotton supplied by an agriculturist | Registered recipient | 5% |
| Silk yarn | Registered recipient | 5% |
| Lottery | Lottery distributor / selling agent | As notified |
| Used vehicles, seized/confiscated goods, scrap sold by government | Registered recipient | As notified |
| Priority Sector Lending Certificates | Registered recipient (bank) | 18% |
Compliance for RCM supplies
- Self-invoice: when you buy from an unregistered supplier under RCM, you (the recipient) must issue a self-invoice under Section 31(3)(f) and a payment voucher under Section 31(3)(g).
- Pay in cash: RCM liability cannot be set off against input tax credit – it must be paid in cash, then claimed back as ITC.
- Input tax credit: available to the recipient in the same or a later period, if the supply is for business and not blocked under Section 17(5).
- Time of supply: for goods, the earliest of receipt, payment, or 30 days from the supplier’s invoice; for services, the earliest of payment or 60 days from the invoice.
- Composition dealers: a person under the composition scheme still pays RCM at normal rates on inward supplies, but cannot claim it as credit.
Free RCM templates (Excel)
Two ready-to-use, editable formats for RCM and composition compliance:
The self-invoice format covers Section 31(3)(f) purchases from unregistered suppliers (with a payment voucher); the bill-of-supply format carries the mandatory composition-dealer declaration.
Frequently asked questions
Who pays GST under the reverse charge mechanism?
The recipient of the goods or services pays the GST directly to the government, instead of the supplier. It applies to supplies notified under Section 9(3), certain unregistered-supplier purchases under Section 9(4), and import of services.
Can I use input tax credit to pay RCM?
No. RCM liability must be paid in cash. You can then claim that tax back as input tax credit in the same or a later period, if the supply is for business and not blocked.
Do I need to issue a self-invoice for RCM?
Yes – when the supplier is unregistered. The recipient issues a self-invoice under Section 31(3)(f) and a payment voucher under Section 31(3)(g). No self-invoice is needed where the supplier is registered and issues a tax invoice.
Is RCM applicable on renting of commercial property?
Yes, from 10 October 2024, where the landlord is unregistered and the tenant is registered, the registered tenant pays GST under RCM. If the landlord is registered, it remains forward charge.
Is sponsorship still under RCM?
Only partly. From 16 January 2025, sponsorship provided by a body corporate is under forward charge. RCM continues where the sponsor is a person other than a body corporate supplying to a body corporate or partnership firm.
Does RCM apply to purchases from unregistered dealers generally?
No – the general Section 9(4) reverse charge on all unregistered purchases is suspended. RCM on unregistered purchases applies only to specifically notified cases (such as real-estate promoters, metal scrap, and renting of commercial property).
Related tools
GST Working File
Composition vs Regular GST
GST Late Fee & Interest
All Working Tools