Reverse Charge
Mechanism (RCM)
Under RCM, the recipient of goods/services pays GST instead of the supplier. Governed by Sections 9(3) and 9(4) of CGST Act, 2017.
Goods under RCM
Notification No. 4/2017-Central Tax (Rate) dated 28.06.2017 (as amended)
| S.No | Description | HSN | Supplier | Recipient (pays GST) | Effective From |
|---|---|---|---|---|---|
| 1 | Cashew nuts (not shelled or peeled) | 0801 | Agriculturist | Any registered person | 01.07.2017 |
| 2 | Bidi wrapper leaves (tendu) | 1404 90 10 | Agriculturist | Any registered person | 01.07.2017 |
| 3 | Tobacco leaves | 2401 | Agriculturist | Any registered person | 01.07.2017 |
| 4 | Silk yarn | 5004, 5005, 5006 | Any person who manufactures silk yarn from raw silk or silk worm cocoons | Any registered person | 01.07.2017 |
| 5 | Raw cotton | 5201 | Agriculturist | Any registered person | 15.11.2017 |
| 6 | Supply of lottery | — | State Government, Union Territory or Local Authority | Lottery distributor or selling agent | 01.07.2017 |
| 7 | Used vehicles, seized and confiscated goods, old and used goods, waste and scrap | — | Central Government, State Government, Union Territory or Local Authority | Any registered person | 13.10.2017 |
| 8 | Priority Sector Lending Certificates (PSLC) | — | Any person | Any registered person | 01.07.2017 |
| 9 | Mentha oil | 3301 | Any unregistered person | Any registered person | 01.10.2021 |
| 10 | Mentha arvensis (entire plant) | 1211 | Any unregistered person | Any registered person | 01.01.2023 |
Services under RCM
Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017 (as amended 16+ times)
Supply of services by any person who is located in a non-taxable territory to any person other than a non-taxable online recipient
Import of services
Services supplied by a Goods Transport Agency (GTA) in respect of transportation of goods by road
Recipient can opt for 5% without ITC
Legal services provided by an individual advocate or firm of advocates
Representation services to Government excluded
Services supplied by an arbitral tribunal
Services provided by the Central/State Government (excluding specified services)
Excludes postal, transport, renting of immovable property to non-government
Services supplied by a director of a company or body corporate
Insurance agent services
Recovery agent services
Services by a music composer, photographer, artist for transfer/permission of copyright
Supply of services by members of Overseeing Committee to RBI
Services by individual Direct Selling Agents (DSAs) to banks/NBFCs
Security services (supply of security personnel)
Added w.e.f. 01.01.2019
Renting of residential dwelling for use as residence (to business entities)
Added w.e.f. 18.07.2022
RCM Compliance Rules
Any person liable to pay GST under RCM must register under GST even if turnover is below threshold limit
GST under RCM must be paid in cash — cannot use Input Tax Credit for payment of RCM liability
If supplier is unregistered, recipient must issue a self-invoice within 30 days (Rule 47A w.e.f. 01.11.2024)
ITC is available on GST paid under RCM, subject to fulfilment of conditions under Section 16
Time of supply under RCM: date of receipt of goods/services, or date of payment, or 30 days from invoice date — whichever is earliest
RCM liability to be reported in Table 3.1(d) of GSTR-3B
ITC on RCM to be claimed in Table 4(A)(2) and 4(A)(3) of GSTR-3B
Section 9(4) — RCM from Unregistered Suppliers
Original Scope (Jul-Oct 2017)
All inward supplies from unregistered persons (01.07.2017 to 12.10.2017)
Abeyance Period
Kept in abeyance from 13.10.2017 to 31.01.2019
Current Scope
Only specific categories — e.g., real estate promoters per Notification 7/2019-CT(Rate), and renting of residential dwelling per Notification 05/2022
No structural change to RCM in the 56th GST Council Meeting (Sept 2025). Sponsorship services removed from RCM (Notification 07/2025) — suppliers now pay GST under forward charge.