What is Reverse Charge Mechanism (RCM) under GST?

Under Reverse Charge Mechanism (RCM), the liability to pay GST shifts from the supplier to the recipient of goods or services. In normal GST, the supplier collects and pays tax. Under RCM, the buyer pays the GST directly to the government, usually because the supplier is unregistered or falls under a specified category.

Which services attract RCM under GST?

Key services under RCM include: GTA (Goods Transport Agency) services at 5%, legal services by advocates to businesses, import of services from outside India at applicable rate, director remuneration, services from unregistered persons to registered businesses (for certain categories), renting of motor vehicles, and security services from unregistered persons.

Can RCM tax be paid using ITC?

No. RCM tax must be paid in cash through challan PMT-06. It cannot be paid using the ITC balance in the electronic credit ledger. However, the RCM tax paid can be claimed back as ITC in the same period if the conditions under Section 16 are satisfied.

What is the GST rate on GTA services under RCM?

GTA (Goods Transport Agency) services attract 5% GST under RCM (2.5% CGST + 2.5% SGST for intra-state, or 5% IGST for inter-state). The recipient who is a registered person must pay this GST under RCM. GTA can optionally pay GST at 12% and take ITC, in which case RCM does not apply.

Is RCM applicable on purchases from unregistered dealers?

RCM on purchases from unregistered persons under Section 9(4) was suspended from October 2017 and has not been reinstated for general supplies. However, it still applies to specific notified categories of goods and services from unregistered persons, and for supplies in special categories like real estate.

RCM Calculator — Reverse Charge Mechanism GST 2025

Service / Supply Category

Transaction Value (₹)

Supply Type

RCM Assessment

RCM Applicable?

Select a category

Transaction Value —

Applicable GST Rate —

Governing Section —

CGST Payable (Cash) —

SGST Payable (Cash) —

IGST Payable (Cash) —

Total RCM GST Payable —

⚠️ RCM tax must be paid in cash — cannot use ITC balance. ITC of RCM paid can be claimed back if eligible.

RCM Service Categories — Section 9(3) Reference

Service / Supply	GST Rate	Section	Notes
Goods Transport Agency (GTA)	5%	9(3)	Recipient must pay 5% GST. GTA can opt to pay 12% themselves (then no RCM). Not applicable if GTA is paying GST themselves at 12%.
Legal Services by Advocate / Firm	18%	9(3)	Any legal service by an individual advocate or firm of advocates to any business entity located in taxable territory.
Import of Services (from outside India)	18%	9(3)	Any service imported from a supplier outside India. IGST applies at the rate applicable to that service. Supply type will always be inter-state (IGST).
Director Remuneration (non-employee)	18%	9(3)	Services supplied by a director of a company/body corporate in capacity as a director (non-salary). Company pays GST under RCM.
Renting of Motor Vehicle (contract carriage)	5%	9(3)	Services of renting a motor vehicle designed to carry passengers from an unregistered person to a body corporate. Rate: 5% under RCM.
Security Services from Unregistered Person	18%	9(3)	Security services provided by a person other than a body corporate to a registered person. The recipient pays 18% GST.
Sponsorship Services to Company / Partnership	18%	9(3)	Any service of sponsorship provided to a company or partnership firm. The company/firm pays 18% GST under RCM.
Services by Overseeing Committee of RBI	18%	9(3)	Services of overseeing committee members supplied to RBI.
Insurance Agent to Insurance Company	18%	9(3)	Services by an insurance agent to any person carrying on insurance business.
Recovery Agent to Bank / NBFC / FI	18%	9(3)	Services by a recovery agent to a banking company, financial institution, or NBFC.
Author / Music Composer / Photographer	12%	9(3)	Copyright services by authors, music composers, photographers, etc. to a publisher or music company. Rate: 12%.
Supply from Unregistered Person (Sec 9(4) — Notified)	18%	9(4)	Selected categories from unregistered to registered — currently limited. General Sec 9(4) is suspended. Check CBIC notifications for specific categories.
Regular B2B Purchase from Registered Supplier	Forward Charge	N/A	Supplier collects and pays GST. No RCM applies. Standard forward charge.
B2C Purchase (Unregistered Buyer)	Forward Charge	N/A	For B2C, the supplier pays GST. RCM does not apply on the buyer side.

How RCM Works — Explained Simply

Normal GST (Forward Charge): Supplier charges GST → collects from buyer → deposits with government. Buyer claims ITC on what supplier paid.

RCM (Reverse Charge): Supplier does NOT charge GST. Buyer calculates the GST themselves → pays it directly in cash to the government via challan → then claims that amount back as ITC in the same tax period (subject to conditions).

Practical example — GTA freight: A logistics company (GTA) charges you ₹50,000 freight. They don't collect GST. You compute 5% GST = ₹2,500 and pay it directly to the government via RCM challan in your GSTR-3B. You then claim ₹2,500 as ITC if you use the freight for taxable business.

RCM categories are notified by CBIC under Section 9(3) of the CGST Act. The Section 9(4) general provision (unregistered to registered) is currently suspended. Always check current CBIC notifications.

Frequently Asked Questions

Do I need to raise an invoice for RCM?▾

Yes. When RCM applies, the recipient (buyer) must raise a self-invoice for the supply received from the supplier. This self-invoice is the document used to claim ITC on the RCM amount paid. It must contain all mandatory GST invoice fields.

What is the due date for paying RCM?▾

RCM tax must be paid by the due date of GSTR-3B for the tax period in which the supply was received — i.e., by the 20th of the following month for monthly filers. Late payment attracts 18% p.a. interest.

If I pay RCM, can I claim it back as ITC?▾

Yes, in the same tax period in which the RCM is paid. The ITC of RCM paid is credited to your electronic credit ledger and can be used to offset output tax liability. However, if the purchase is for exempt or personal use, ITC cannot be claimed.

Does RCM apply on freight paid to a courier company?▾

No. Courier companies are not classified as GTAs under GST. RCM on GTA applies specifically to Goods Transport Agencies that issue consignment notes. Courier services attract forward charge GST collected by the courier company.