Reporting Outward Supplies under RCM in Form GSTR-3B: FAQs

Summary: Outward supplies attracting Reverse Charge Mechanism (RCM), where the recipient is liable to pay GST, remain taxable supplies and should not be treated as exempt or nil-rated supplies by the supplier. Since Table 3.1 of Form GSTR-3B does not contain a separate row for ordinary outward RCM supplies, the supplier is not required to report their value in any specific row of Table 3.1 and should not disclose the turnover under Table 3.1(c). The supplier is also not required to discharge the GST through GSTR-3B. Where applicable, the supplier should report the corresponding invoice details in Form GSTR-1 with the appropriate reverse-charge indication. The recipient is required to report the inward supply liable to RCM in Table 3.1(d) of GSTR-3B and pay the applicable GST, with eligible ITC claimed in the appropriate table. The material distinguishes ordinary outward RCM supplies from Section 9(5) supplies through e-commerce operators, for which Table 3.1.1 provides separate reporting. The example states that for a ₹10 lakh taxable supply at 18% GST, the recipient pays ₹1.80 lakh under RCM.

FAQ- Reporting Outward Supplies under Reverse Charge Mechanism (RCM) in Form GSTR-3B

Reporting Outward RCM Supplies in Table 3.1 of GSTR-3B

Question: Where should outward supplies attracting Reverse Charge Mechanism (RCM), on which tax is payable by the recipient, be reported by the supplier in Table 3.1 of Form GSTR-3B?

Answer: Table 3.1 of Form GSTR-3B contains the following categories:

3.1(a) – Outward taxable supplies, other than zero-rated, nil-rated and exempted
3.1(b) – Outward taxable supplies (zero-rated)
3.1(c) – Other outward taxable supplies (nil-rated, exempted)
3.1(d) – Inward supplies liable to reverse charge
3.1(e) – Non-GST outward supplies

However, there is no separate row in Table 3.1 for outward supplies attracting RCM where the tax is payable by the recipient.

Whether Outward RCM Supplies Should Be Reported as Exempt

Question: Whether outward supplies on which tax is payable by the recipient under reverse charge should be reported as exempt supplies in Form GSTR-3B by the supplier?

Answer: This issue is commonly faced by suppliers making outward supplies on which the recipient is liable to discharge GST under the Reverse Charge Mechanism (RCM).

Such outward supplies should not be treated as exempt or nil-rated supplies merely because the supplier is not required to pay the tax. The supplies continue to be taxable supplies under GST; only the person responsible for payment of tax shifts from the supplier to the recipient.

Accordingly, the supplier should not report such RCM outward supplies as exempt supplies in Table 3.1(c) of Form GSTR-3B. Table 3.1(c) is meant for supplies that are actually exempt, nil-rated or otherwise covered by the relevant category of supplies having no tax liability.

The GSTN’s return-format instructions separately recognise outward supplies attracting reverse charge, and specifically exclude them from the residual non-GST/no-supply category.

Correct Way to Report Outward RCM Supplies

Question: What is the correct way to report outward supplies attracting Reverse Charge Mechanism (RCM), on which tax is payable by the recipient? ← Minor grammar correction

More importantly, from the supplier’s perspective, the value of ordinary outward supplies attracting RCM is not required to be reported in any separate column of Table 3.1 of Form GSTR-3B. The supplier does not discharge the tax on such supplies through GSTR-3B. The corresponding invoice details, where applicable, are reported in Form GSTR-1 with the reverse-charge indicator.

Thus:

RCM outward supply is not an exempt supply. It is a taxable supply on which the recipient, rather than the supplier, is liable to pay GST.

Therefore, reporting the value of such RCM outward supplies under exempt supplies in GSTR-3B may result in an incorrect disclosure of exempt turnover and should be avoided.

Distinction from Section 9(5) Supplies

One important distinction: this should not be confused with Section 9(5) supplies through an e-commerce operator, for which a specific Table 3.1.1 exists in GSTR-3B. GSTN has expressly provided separate reporting for such supplies.

Correct Reporting of Outward RCM Supplies by the Supplier

Question: What is the correct way to report outward supplies attracting Reverse Charge Mechanism (RCM), on which tax is payable by the recipient, in Form GSTR-3B by the supplier?

Answer: ← Punctuation correction from “Answer-”

Where an outward supply is covered under the Reverse Charge Mechanism (RCM) and the recipient is liable to pay GST, the supplier is not required to discharge the tax liability on such supply through Form GSTR-3B.

More importantly, from the supplier’s perspective, the value of ordinary outward supplies attracting RCM is not required to be reported in any separate column of Table 3.1 of Form GSTR-3B. The supplier should not report such supplies as exempt or nil-rated supplies under Table 3.1(c) merely because the tax is payable by the recipient.

The corresponding invoice details, wherever applicable, are to be reported by the supplier in Form GSTR-1 with the appropriate reverse-charge indicator, enabling the recipient to identify the supply as one on which tax is payable under RCM.

Thus: RCM does not make the outward supply an exempt supply. It remains a taxable supply, but the liability to pay GST is shifted from the supplier to the recipient. Accordingly, the supplier should not include the value of such RCM supplies as exempt turnover in GSTR-3B.

Reporting Responsibilities of Supplier and Recipient

In brief:

Supplier → Reports invoice in GSTR-1 with RCM indication, wherever applicable.
Supplier → No GST payment on such supply through GSTR-3B.
Supplier → Does not report it as exempt/nil-rated supply in Table 3.1(c).
Recipient → Reports the inward supply liable to RCM and pays the applicable GST.

Example of Outward RCM Supply and GSTR-3B Reporting

Suppose A Ltd. provides a taxable service of ₹10,00,000 to B Ltd. The service is one on which GST is payable by the recipient under RCM, and the applicable GST rate is 18%.

Accordingly:

Value of service: ₹10,00,000
GST @ 18%: ₹1,80,000
B Ltd. (recipient) is liable to pay ₹1,80,000 under RCM.
A Ltd. (supplier) does not pay ₹1,80,000 through its GSTR-3B.

Reporting by A Ltd. — Supplier

A Ltd. should:

1. Report the relevant invoice in GSTR-1 with the appropriate RCM indication.
2. Not report ₹10,00,000 as exempt/nil-rated turnover in Table 3.1(c) of GSTR-3B.
3. Not pay ₹1,80,000 as output tax in its GSTR-3B.
4. Since Table 3.1 does not provide a separate column for such outward RCM supplies, the value is not required to be reported in any specific row of Table 3.1.

Reporting by B Ltd. — Recipient

B Ltd. should:

Report the inward supply liable to RCM in Table 3.1(d) of GSTR-3B.
Pay ₹1,80,000 GST under RCM.
Subject to eligibility, claim the corresponding ITC in the appropriate ITC table.

Simple Illustration of RCM Reporting

A Ltd. → Supply ₹10 lakh → B Ltd.
RCM applicable → B Ltd. pays ₹1.80 lakh GST

A Ltd.: GSTR-1 → RCM invoice reported
A Ltd.: GSTR-3B → ₹10 lakh not reported as exempt supply
B Ltd.: GSTR-3B → ₹1.80 lakh reported under Table 3.1(d) and tax paid under RCM.

Key Point on Taxability of Outward RCM Supplies

Key point: The ₹10 lakh supply is taxable, not exempt. The only difference is that the recipient, and not the supplier, is liable to pay the GST.

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Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the author whatsoever and the content is to be used strictly for informational and educational purposes. While due care has been taken in preparing this article, certain mistakes and omissions may creep in. the author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.