Reverse Charge Mechanism (RCM) in GST: Complete Guide#
What is Reverse Charge?#
Reverse Charge means the recipient pays tax instead of the supplier.
When is RCM Applicable?#
Goods:#
- Petroleum crude
- High speed diesel
- Motor spirit
- Natural gas
- Aviation turbine fuel
- Tobacco products
Services:#
- Legal services (from advocate)
- Director services
- GTA services
- Works contract
- Restaurant (above Rs 75 lakh)
Registration#
- Mandatory if RCM liable
- Cannot opt for composition
- File GSTR-1 with RCM details
Rate of Tax#
Same as forward charge Example: 18% on legal services
Compliance#
- Pay tax under RCM
- Claim ITC (if eligible)
- Show in GSTR-3B
- Issue self-invoice
Example#
Legal services: Rs 1,00,000
- GST @ 18%: Rs 18,000
- Paid by recipient
- Claim as ITC