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A comprehensive review of the Reverse Charge Mechanism (RCM) under the Goods and Services Tax (GST) outlines transactions where the recipient, rather than the supplier, is mandated to remit GST. This system applies across various services and goods, with specific rates and HSN/SAC classifications. For services, RCM is applicable to imports, certain transport services by road, legal services to business entities, and a range of government-provided services, including royalty payments. It also extends to renting of immovable or residential properties, security services, and services rendered by company directors, insurance agents, and arbitral tribunals. Regarding goods, agricultural produce such as cashew nuts, tendu leaves, tobacco, and raw cotton, when supplied by an agriculturist to a registered person, fall under RCM. Other goods include essential oils, silk yarn, lottery distribution, and the supply of used or seized items. For real estate promoters, RCM is triggered by the transfer of development rights or FSI, and also applies to certain purchases of goods and services from unregistered suppliers, particularly cement and capital goods, when specified thresholds are not met. The rates vary depending on the transaction, and adherence to specific conditions, including supplier and recipient status, is crucial for compliance. The document details these provisions to clarify the shift in GST liability for specific transactions.
| RCM ON SERVICES | |||||
| # | SAC | Type of Service | Supplier | Recipient | Rate |
| 1 | Any | Import of Service (When – Supplier is Outside India – Recipient is In India – PoS is In India) |
Person located in a Non-Taxable Territory | Person located in the Taxable Territory – IMPORTER | See NN 08-2017 ITR |
| 2 | 996511 | Goods Transport Services By Road | GTA (Who has not Opted for 12% Forward Charge) |
Any Registered Person under GST / Factory / Society / Co-op Society / Body Corporate / Partnership Firm / AOP / Casual Taxable Person
(Who Pays to GTA) |
5% |
| Note: 1) The Option is with GTA either to Go with 12% or 5%. If GTA has opted 12%, then it’ll be under Forward Charge 2) RCM on GTA Services is Not applicable to CG / SG / Local Authority / Govt Agencies who is registered only for GST-TDS 3) Unregistered Recipient (say Individual), other than specifically listed as “Recipient” as above, are exempted from RCM (Entry 21A NN 12-2017 CTR) 4) GTA Services by Road for Agriculture Produce, milk, salt, food grain, flour, pulses, rice, newspapers etc. are exempted (Entry 21 NN 12-2017 CTR) |
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| 3 | 996601 | Renting of Passenger Transport Vehicle – When Cost of Fuel is included | Any person Except body corporate (Who has not opted for 12% Forward Charge) |
Body Corporate | 5% |
| Note: 1) The Option is with Supplier either to Go with 12% or 5%. If Supplier has opted 12%, then it’ll be under Forward Charge 2) ITC to the recipient is not eligible (unless the Approved seating capacity of the vehicle is > 13) |
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| 4 | 9982** | Legal Services (In any Branch of law, Say GST) |
By Advocate or Firm of advocate | Business Entity | 18% |
| Note: Business Entity having Turnover below 40L / 20L / 10L and not required to get registration – is also exempted from paying RCM of Legal Services (Entry 45 NN 12-2017 CTR) | |||||
| 5 | Any
(for Royalty: 997337) |
Any Services Supplied by CG, SG, UT or Local Authority (Including ROYALTY Payment to Govt) EXCEPT: 1) Renting of Immovable Property 2) Postal Department’s Services 3) Aircraft of vessel Services 4) Transport of Goods / Passengers |
CG, SG, UT or Local Authority | Business Entity | See NN 11-2017 CTR |
| 6 | 997211/ 997212 | Renting of Immovable Property by CG, SG, UT or Local Authority (Except by Indian Railways) |
CG, SG, UT or Local Authority | Any Registered Person | 18% |
| 7 | 997211 | Renting of Residential Property (Use can be Any – Residential / Commercial) |
Any person | Any registered person | 18% |
| Note: If Such Residential Property is taken on Rent to by a “Proprietor” for his personal Use, then it’s exempted (Entry 12 NN 12-2017 CTR) | |||||
| 8 | 997212 | Renting of Commercial Property (Any Immovable Property Except Residential Property) |
Any unregistered person | Any registered person (Except Composition Tax Payer) |
18% |
| Note: If Supplier of Renting of Commercial Property is Registered, then It’ll be Under Forward Charge | |||||
| 9 | 998525 | Security Services | Any person (Except body corporate) |
Any registered person | 18% |
| Note: 1) RCM on Security Services is Not applicable to CG / SG / Local Authority / Govt Agencies who is registered only for GST-TDS. 2) RCM on Security Services is Not applicable to Composition Taxable Person |
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| 10 | 9983** | Services supplied by a Director | Director | Company / Body Corporate | 18% |
| Note: 1) Services Provided only “In the Capacity of Director” will be covered (Circ 201-2023 Dt. 01-08-23) 2) if Such Director on Employment and TDS is deducted u/s 192, then Sch-III Item, No GST (Circ 140-2020 Dt. 10-06-20) |
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| 11 | 9971** | Services supplied by an insurance agent | An insurance agent | Person carrying on insurance business | 18% |
| 12 | 997159 | Services by INDIVIDUAL DSAs (other than Body Corporate / P’ship / LLP) |
INDIVIDUAL DSAs | Bank / NBFC | 18% |
| 13 | 997159 | Services by Business Facilitator (BF) | Business Facilitator (BF) | Bank | 18% |
| 14 | 997159 | Services by Agent of Business Correspondent (BC) | Agent of business Correspondent (BC) | Business Correspondent | 18% |
| 15 | 998215 / Any | Services supplied by an Arbitral Tribunal | An Arbitral Tribunal | Business Entity | See NN 11-2017 CTR |
| 16 | 998397 | Sponsorship Services | Any person (Except body corporate) |
Body Corporate / P’ship firm | 18% |
| 17 | 998599 | Services supplied by a Recovery Agent | Recovery Agent | Bank / Financial Institution / NBFC | 18% |
| 18 | 997332 / 33 | Transfer / permitting the use / enjoyment – of a Copyright | Music composer, photographer, artist, or the like | Music company, producer or the like | 18% |
| 19 | 997334 | Transfer / permitting the use / enjoyment – of a Copyright | Author (Except those Author Who Opted Forward Charge) |
Publisher | 18% |
| 20 | Any | Supply of services by the members of Overseeing Committee to RBI | Members of Over-seeing Committee | RBI | See NN 11-2017 CTR |
| 21 | 997119 | Services of lending of Securities | Lender | Borrower | 18% |
| RCM ON GOODS | |||||
| # | HSN | Type of Goods | Supplier of Goods | Recipient of Goods | Rate |
| 1 | 0801 | Cashew nuts, not shelled or peeled | Agriculturist | Any registered person | 5% |
| 2 | 14049010 | Tendu Leaves | Agriculturist | Any registered person | 18% |
| 3 | 2401 | Tobacco Leaves | Agriculturist | Any registered person | 5% |
| 4 | 5201 | Raw cotton | Agriculturist | Any registered person | 5% |
| 5 | 33012400 / 2510 | Essential Oils | Any Unregistered Person | Any registered person | 12% |
| 6 | 33012520 / 30 / 40 / 90 | Essential Oils | Any Unregistered Person | Any registered person | 18% |
| 7 | 5004 / 5006 | Silk yarn | Any person who manufactures silk yarn | Any registered person | 5% |
| 8 | Any | Supply of lottery | State Govt / UT / Local Authority | Lottery distributor or selling agent | 28% |
| 9 | Any | Used vehicles / seized goods / used goods / scrap | CG / SG / UT / Local Authority (Except Indian Railways) | Any registered person | See NN 01-2017 CTR |
| 10 | Any | Priority Sector Lending Certificate | Any registered person | Any registered person | 12% |
| 11 | 72 to 81 | Metal scrap | Any unregistered person | Any registered person | 18% |
| Note: Generally, if Supplier’s 100% Turnover falls under RCM, he is not required to take Registration even if ATTO exceeds 20L / 40L (NN 05-2017 CT).
The said benefit is not available to Metal Scrap Supplier (NN 24-2024 CT dt. 10-10-24). Upon Registration, such Transaction will fall under FCM. |
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| RCM for PROMOTOR – BUILDER | |||||
| # | HSN / SAC | Type of Goods / Service | Supplier | Recipient | Rate |
| 1 | 9972** | Transfer of Development Rights / FSI / Long term lease of land (30 years or more) |
Any person | Promoter (Residential / Commercial – Any) |
18% |
| Note: 1) For Residential Projects – RCM is applicable Proportionally – only for those apartments which remains un-booked on the date of completion (Entry 41A 12-2017 CTR) 2) For Residential Projects – RCM @18% on TDR / FSI etc. shall not exceed 1% / 5% of the consideration value of un-booked apartments (Entry 41A 12-2017 CTR) 3) RCM Liability required to be discharged at the time when the completion Certificate has been issued (NN 06-2019 CTR) |
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| 2 | Any | Supply of Any Goods or Services Except TDR / FSI / Long-term Lease of Land (When Such Purchase from Registered Person Falls short of 80% of Total Purchase) |
Unregistered | Promoter of Residential Real-Estate Project (RREP) | FLAT RATE 18% |
| 3 | 2523 | Cement | Unregistered | Promoter (Residential / Commercial – Any) |
28% |
| 4 | Any | Capital Goods | Unregistered | Promoter of Residential Real-Estate Project (RREP) | See NN 01-2017 CTR |
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