GST Reverse Charge Mechanism RCM - citizen guide 2026

Priya, a freelance designer in Pune, hired an advocate for a contract dispute. The lawyer sent a bill with no GST on it. Months later her accountant said she owed that GST herself. She had just met the reverse charge mechanism, where the buyer, not the seller, pays the tax to the government.

Reverse charge means the liability to pay GST shifts from the supplier to the recipient of the supply. Normally the seller charges GST on the invoice and deposits it. Under RCM the buyer self-assesses the tax and pays it to the government directly. The supplier does not charge GST on that supply.

The reverse charge mechanism is defined in Section 2(98) of the CGST Act, 2017: the liability to pay tax by the recipient instead of the supplier under sub-section 3 or 4 of Section 9.

Two routes create an RCM liability:

• Section 9(3) - the government notifies specific categories of goods or services where the recipient must pay GST. This does not depend on whether the supplier is registered.
• Section 9(4) - RCM on supplies from an unregistered supplier to a registered person. The broad version was suspended; it now applies only to notified classes, mainly promoters in real estate under Notification 07/2019-Central Tax Rate.

The notified services list lives in Notification 13/2017-Central Tax Rate, as amended. The administering authority is the Central Board of Indirect Taxes and Customs (CBIC), with the GST Council recommending what gets notified.

These are among the categories notified under Notification 13/2017, where a business recipient pays GST under reverse charge:

• Goods Transport Agency (GTA) services for transport of goods by road, received by a registered person or body corporate.
• Legal services by an individual advocate, senior advocate or firm of advocates to a business entity.
• Services by a director of a company or body corporate, to that company or body corporate.
• Sponsorship services supplied to a body corporate or partnership firm.
• Services by an arbitral tribunal to a business entity.

If you receive any of these, the supplier will not charge you GST. You must pay it yourself.

1. Check if the supply is notified. Match your purchase against the Section 9(3) services list and the goods list. If it is listed, RCM applies.
2. Register for GST if you are not already. Under Section 24 of the CGST Act, any person required to pay tax under reverse charge must register, regardless of turnover. The Rupee 20 lakh / 40 lakh thresholds do not protect you here.
3. Issue a self-invoice if the supplier is unregistered. Under Section 31(3)(f), a registered recipient liable under RCM must issue an invoice to himself for goods or services received from an unregistered supplier.
4. Calculate and pay the tax in cash. The RCM liability must be discharged through the electronic cash ledger. You cannot use existing input tax credit to pay the RCM amount itself.
5. Claim input tax credit afterwards. Once paid, you can claim that RCM tax as input tax credit if the supply is otherwise eligible, using your self-invoice as the document.
6. Report it in your returns. Show RCM tax payable in GSTR-3B and your eligible credit in the same return.

• GST registration certificate (GSTIN)
• Supplier invoice, or your own self-invoice if the supplier is unregistered
• Payment voucher for the supplier
• Working sheet showing the RCM tax computed and the rate applied
• GSTR-3B acknowledgement showing the RCM tax paid

• Assuming the turnover threshold protects you. Section 24 forces registration the moment you are liable under RCM, even at zero turnover.
• Paying RCM tax using input tax credit. The RCM liability must be paid in cash; ITC can only be claimed afterwards.
• Forgetting the self-invoice under Section 31(3)(f) when buying from an unregistered supplier, which can block your ITC claim.
• Treating an advocate or GTA bill as GST-free. No GST on the invoice does not mean no GST is due - it means you owe it.
• Missing the RCM entry in GSTR-3B, leaving an unpaid liability that surfaces during scrutiny.

If a GST officer disputes your RCM classification, or your input tax credit on RCM tax is stuck, you have escalation routes. You can raise a ticket on the GST self-service helpdesk, lodge a grievance on CPGRAMS (pgportal.gov.in), or write to your jurisdictional GST officer for a written clarification. A written, dated request creates a record you can rely on later.

The recipient of the goods or services pays GST directly to the government, instead of the supplier collecting it. This happens only for categories notified under Section 9(3) or supplies covered by Section 9(4).

Yes. Under Section 24 of the CGST Act, any person required to pay tax under reverse charge must register, even if turnover is below the normal threshold.

No. The reverse charge liability must be paid in cash through the electronic cash ledger. You can claim that tax back as input tax credit afterwards, if the supply is otherwise eligible.

For legal services by an advocate or firm of advocates to a business entity, the recipient pays under reverse charge. The advocate does not charge GST on the bill.

When you receive goods or services under reverse charge from an unregistered supplier, Section 31(3)(f) requires you, the registered recipient, to issue an invoice to yourself.

No. The broad version of Section 9(4) was suspended. It now applies only to notified classes, mainly promoters in real estate under Notification 07/2019-Central Tax Rate.

The unpaid tax can surface during scrutiny or audit, with interest and penalty. You may also lose the input tax credit you would have been entitled to if you had reported it correctly.

• CGST Act, 2017 - Section 2(98), Section 9, Section 24, Section 31(3)(f) (indiacode.nic.in, cbic-gst.gov.in)
• Notification 13/2017-Central Tax Rate (services under reverse charge), CBIC
• Notification 07/2019-Central Tax Rate (real estate promoters under Section 9(4)), CBIC

• The RTI Playbook
• AI RTI Drafter
• First Appeal Builder
• AwaazRTI voice tool
• The RTI Act 2005