The Reverse Charge Mechanism (RCM) is a crucial aspect of the Goods and Services Tax (GST) framework in India, shifting the tax liability from the supplier to the recipient of goods and services. This document provides a summarized overview of the RCM provisions, outlining the applicable goods and services, their suppliers, recipients, and corresponding GST rates. While we have made every effort to present a concise and accurate summary, it is strongly recommended to refer to the latest notifications and updates on the Central Board of Indirect Taxes and Customs (CBIC) Portal before making any business or tax-related decisions
A. Supply of Goods under RCM
| S. No. | Description of Goods | Supplier | Recipient | GST Rate |
| 1. | Cashew nuts, not shelled or peeled | Agriculturist | Registered person | Applicable GST rate |
| 2. | Bidi wrapper leaves (tendu) | Agriculturist | Registered person | Applicable GST rate |
| 3. | Tobacco leaves | Agriculturist | Registered person | Applicable GST rate |
| 4. | Silk yarn | Manufacturer of silk yarn from raw silk or silk worm cocoons | Registered person | Applicable GST rate |
| 5. | Raw cotton | Agriculturist | Registered person | Applicable GST rate |
| 6. | Supply of lottery | State Government, Union Territory, or local authority | Lottery distributor or selling agent | Applicable GST rate |
| 7. | Used vehicles, seized and confiscated goods, old and used goods, waste and scrap | Central/State Government, Union territory, or local authority | Registered person | Applicable GST rate |
| 8. | Priority Sector Lending Certificate | Registered person | Registered person | Applicable GST rate |
| 9. | Metal scrap | Unregistered person | Registered person | Applicable GST rate |
B. Supply of Services under RCM
| S. No. | Description of Services | Supplier | Recipient | GST Rate |
| 1. | Services by a goods transport agency (GTA) for transportation of goods (excluding certain items) | GTA | Registered person | 5% (without ITC) or 12% (with ITC) |
| 2. | Legal services by an individual advocate, including a senior advocate or firm of advocates | Advocate or firm of advocates | Any business entity located in taxable territory | Applicable GST rate |
| 3. | Services supplied by an arbitral tribunal | Arbitral tribunal | Any business entity located in taxable territory | Applicable GST rate |
| 4. | Sponsorship services | Any person | Any body corporate or partnership firm | Applicable GST rate |
| 5. | Services provided by the Central or State Government, Union territory, or local authority to a business entity (excluding certain services) | Government or local authority | Any business entity located in taxable territory | Applicable GST rate |
| 6. | Services by a director of a company or a body corporate | Director | Company or body corporate | Applicable GST rate |
| 7. | Services by an insurance agent | Insurance agent | Any person carrying on insurance business | Applicable GST rate |
| 8. | Services by a recovery agent | Recovery agent | Banking company or financial institution or NBFC | Applicable GST rate |
| 9. | Transportation of goods by a vessel from a place outside India up to the customs station of clearance in India | Person located in non-taxable territory | Importer as defined under Customs Act | Applicable GST rate |
| 10. | Transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Indian Copyright Act, 1957 | Author, music composer, photographer, artist, etc. | Publisher, music company, producer | Applicable GST rate |
| 11. | Supply of services by a member of an overseeing committee to Reserve Bank of India | Member of overseeing committee | Reserve Bank of India | Applicable GST rate |
| 12. | Services provided by business facilitator (BF) to a banking company | Business facilitator | Banking company | Applicable GST rate |
| 13. | Services provided by an agent of business correspondent (BC) to business correspondent | Agent of business correspondent | Business correspondent | Applicable GST rate |
| 14. | Security services (services provided by way of supply of security personnel) provided to a registered person (excluding certain entities) | Any person other than a body corporate | Registered person | Applicable GST rate |
| 15. | Services provided by way of renting of a motor vehicle provided to a body corporate (with certain conditions) | Any person other than a body corporate, paying central tax at the rate of 2.5% on renting of motor vehicles with input tax credit only of input service in the same line of business | Body corporate | Applicable GST rate |
| 16. | Services of lending of securities under Securities Lending Scheme, 1997 of SEBI | Lender (a person who deposits the securities registered in his name or in the name of any other person duly authorized on his behalf with an approved intermediary for the purpose of lending under the Scheme) | Borrower (a person who borrows the securities under the Scheme through an approved intermediary of SEBI) | Applicable GST rate |
| 17. | Services supplied by individual Direct Selling Agents (DSAs)other than a body corporate, partnership or limited liability partnership firm to bank or non-banking financial company (NBFCs) | Individual Direct Selling Agents (DSAs) other than a body corporate, partnership or limited liability partnership firm | A banking company or a non-banking financial company, located in the taxable territory | Applicable GST rate |
| 18. | Services supplied by the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a person registered under the Central Goods and Services Tax Act, 2017(12 of 2017) | Central Government, State Government, Union territory or local authority | Any person registered under the Central Goods and Services Tax Act, 2017 | Applicable GST rate |
| 19. | Services supplied by any person by way of transfer of development rights or Floor Space Index(FSI)(including additional FSI)for construction of a project by a promoter | Any person | Promoter | Applicable GST rate |
| 20. | Long term lease of land (30 years or more) by any person against consideration in the form of upfront amount (called as premium, salami, cost, price, development charges or by any other name) and/or periodic rent for construction of a project by a promoter | Any person | Promoter | Applicable GST rate |
| 21. | Service by way of renting of any property other than residential dwelling | Any unregistered person | Any registered person (other than a person who has opted to pay tax under composition levy) | Applicable GST rate |
Notes:
- The term “agriculturist” refers to an individual or Hindu Undivided Family who undertakes cultivation of land by own labour or by the labour of family or by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family.
- The GST rates mentioned are subject to change as per the latest notifications issued by the government.
- For certain services like GTA, the recipient has the option to pay GST at 12% with full Input Tax Credit (ITC) or 5% with no ITC.
- This table is based on the provisions as of February 13, 2025. For the most current information, please refer to the latest notifications and circulars issued by the Central Board of Indirect Taxes and Customs (CBIC).
A thorough understanding of the Reverse Charge Mechanism is vital for businesses to fulfill their GST obligations effectively. By adhering to the prescribed RCM provisions, organizations can maintain seamless tax compliance and avoid unnecessary financial liabilities. However, as GST regulations continue to evolve, staying updated with the latest CBIC notifications is imperative. This document serves as a helpful reference, but for the most current legal and procedural updates, businesses should always verify details on the CBIC portal.
Disclaimer:
The views expressed in this article are those of the author and should not be considered as professional advice or opinion. We strongly recommend that readers seek professional advice before arriving at any decision or conclusion based on the content of this article. We shall not be held responsible for any loss or damage incurred by anyone relying on the information provided herein. The above views are based on our understanding of the provisions and should be independently verified for accuracy
Author can be reached at office.bhavikco@gmail.com
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