Reverse Charge means the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply.

There are two type of reverse charge scenarios provided in law. First is dependent on the nature of supply and/or nature of supplier. This scenario is covered by section 9 (3) of the CGST/SGST (UTGST) Act and section 5 (3) of the IGST Act.

As per CGST Amendment Act 2018 w.e.f. 01 Feb 2019 , Sec 9(4) has been amended to refer only to specified goods and services as notified by the Government and not all supplies. But the list is yet to be notified, after which this provision Sec 9(4) shall apply to all such supplies notified

Reverse Charge Mechanism (RCM)

There are a number of notifications issued , time to time ,by the Government for adding specified goods, services and category of supplier to be covered under Reverse Charge mechanism (RCM).

A consolidated updated list indicating nature of supply ( goods / services ), category of the supplier and the recipient covered under RCM  is as indicated below :-

Sl. Nature of Supply ( Goods / Services) Supplier of Goods/ Services Recipient of Goods / Services
1 Purchase of cashew nuts, not shelled or peeled Agriculturist Any registered person
2 Purchase of bidi wrapper leaves (tendu) Agriculturist Any registered person
3 Purchase of tobacco leaves Agriculturist Any registered person
4 Purchase of silk yarn Any person who manufactures silk yarn Any registered person
5 Purchase of raw cotton Agriculturist Any registered person
6 Purchase of lottery ticket State Government Selling agent
7 Purchase of used vehicles, seized and confiscated goods, old and used goods,
waste and scrap
Central Government, State Government, Union territory or a local authority Any registered person
8 Purchase of priority Sector Lending Certificate Banks / Financial Institution Any registered person
9. Purchase of Cement Any person Promoter/ Builder






Services of Goods Travel Agency (GTA) Goods Transport Agency (GTA) Any factory, society, co-operative society, registered person, body corporate, partnership firm, casual taxable person located in the taxable territory
10(a) RCM on GTA services not applicable if  GTA  opts  to pay the tax on forwards charge @ 12%
11 Legal Services of the  advocate An individual advocate including a senior advocate or firm of advocates Any business entity located in the taxable territory
12 Services of  an arbitral tribunal to a business entity An arbitral tribunal Any business entity located in the taxable territory
13 Sponsorship services Any person Anybody corporate or partnership firm located in the taxable territory
14 Director’s services ( except remuneration) A director of a company or a body corporate The company or a body corporate located in the taxable territory
15 Services of insurance Agent An insurance agent Any person carrying on insurance
business, located in the taxable
16 Services of Recovery Agent A recovery agent A banking company or a financial institution or a non-banking financial company, located in the taxable territory
17 Services of overseas Committee Members of Overseeing Committee constituted by the Reserve Bank of India Reserve Bank of India.
18  Services of  an author, music composer, photographer, artist or the like by way of transfer or permitting the use or enjoyment of a copyright covered under section Author or music composer, photograph her, artist, or the like Publisher, music company, producer or the like, located in
the taxable territory
18(a)    Author can exercises the option to pay GST  on the service relating to original literary works under forward    charge w.e.f 01.10.2019
19 Services  by way of transfer of development rights or Floor Space Index (FSI) (including additional FSI) for construction of a project . Any person Promoter
20 Long term lease of land (30 years or more)  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 Any person Promoter
21 Services of an  individual Direct Selling Agents (DSAs) 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
22 Services of a  business facilitator (BF) Business facilitator (BF) A banking company,
located in the taxable territory
23 Services of business correspondent (BC) An agent of business
correspondent (BC)
A business correspondent, located in the taxable territory
24 Security services Any person other than a body corporate A registered person,
located in the taxable territory
25 w.e.f. 01.10.2019
Services of hiring of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration paid by  service recipient,
Any person, other than a body corporate who supplies the service to a body corporate and does not issue an invoice charging central tax at the rate of 6 per cent. to the service recipient Any body corporate located in the taxable
26 w.e.f. 01.10.2019
Services of lending of securities under Securities Lending Scheme, 1997 (“Scheme”) of Securities and Exchange Board of India (“SEBI”), as amended.
Lender i.e. a person
who deposits the securities registered in his name or in the name of any other person duly authorised on his behalf with an approved intermediary for the purpose of lending under the Scheme of SEBI
Borrower i.e. a person who borrows the securities under the Scheme through an approved
intermediary of SEBI.

In addition to the above , following expenditure /services are also covered under RCM :-

(a) Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding, –

(1) renting of immovable property, and

(2) services specified below-

(i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central Government, State Government or Union territory or local authority;

(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

(iii) transport of goods or passengers.

(b) 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).

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  1. YASH JAIN says:

    Superb explained , thanks for this.

    I have a query regards a company registred under GST purchased material like Wheat,rice , bajra, pulses etc from unregistered person , whether co liable to pay gst on these good or nt

  2. Amit Kumar Singh says:

    We have taken zoom subscription, every month we pay for renewal . Want to know is there any RCM applicability.Also please suggest is there any TDS applicablity.
    Payment done from credit card.

    1. sanjeev kumar says:

      Tds as per 194J is applicable if the value exceeds 30000
      In case of RCM, it is applicable since it comes under the category intellectual prop rights

  3. Bhavesh Saraiya says:

    A private limited company getting job charge (textile industry) from unregistered person.

    GST under RCM applicable?

    It is difficult to interpret & conclude.

    Can you please revert from supporting circulars?

    1. Anita Bhadra says:

      The payment to Government ( Central, State & local Authorities ) for services ( other than specifically excluded ie postal services, etc ) covers under RCM

      Licensing Fee, another approval fee, etc covers under RCM ( in case such services are exempted vide exemption notification, payment under RCM is not required)
      (One need to check carefully whether service provider falls under the definition of Government and services are not exempted )

  4. Agrawal Arvind says:

    Earlier there was a limit of gst exemption for purchase upto 5000/- per day from unregistered persons. Whether this limit still there . Or there is no RCM now without any limit on purchase from unregistered persons.
    Also if GST applicable job work by unregistered jobber upto RS 20 lacs . What if job bill by the jobber cross Rs 20 lacs in a financial year

    1. Anita Bhadra says:

      RCM from the unregistered person has been removed w.e.f 13 Oct 2017. Now there is no RCM on purchase from unregistered.

      GST is not applicable to the unregistered job worker.
      Job worker is required to obtain registration only if his aggregate turnover to be computed on all India basis in a financial year exceeds the limit (Rs. 20 lakh or Rs. 10 lakh in case of special category states except Jammu & Kashmir).

  5. R Rukmani says:

    is Manpower supplier’s charges – is it covered under RCM. (at present our supplier is in other state hence IGST is applicable).
    Kindly help us to understand RCM applicable for Manpower services?

    1. Anita Bhadra says:

      The RCM is applicable for Security services (services provided by way of supply of security personnel) provided to a registered person.

      It is not applicable to normal manpower supply


    Three people are director & share holders, if we are paying consultancy of Rs 1.50 lakh each month than total is 18 lakh than RCM will be applicable, Kindly confirm the same

  7. gowtham kumar vasamsetty says:

    Madam, Good explanation. But I have one doubt.
    Whether RCM applicable if GTA(Unregistered) provides service to a company. If yes, what is the rate applicable? Are there any threshold limits for applicability of RCM in this case?

  8. Prerana says:

    Madam, can you clarify if RCM is applicable on purchase of TDR for commercial properties? If yes then point of taxation i.e. when to pay tax?

    1. Anita Bhadra says:

      The supply of TDR, used for the construction of commercial space: GST at 18%..
      The promoter is liable to pay GST on reverse charge basis on TDR.
      The liability to pay tax arises on the date of completion or first occupation of the project whichever is earlier

      1. Pratik Anand says:

        Dear Madam,

        Can you please clarify if RCM is applicable on TDR received before 01.04.2019 say Dec’2018 but the project does not qualify as an ongoing project.

        1. Anita Bhadra says:

          RCM is not applicable If TDR transferred prior to 01.04.2019. – Refer FAQ ( Part 1)- Q No. 38 issued by CBI&C vide circular No. F. No. 354/32/2019- TRU dated 07.05.2019

  9. Pavan Talreja says:

    Commercial property owned by the director which was given on lease to the company and accordingly company is paying rent to the whether rental service provided by the director would be covered under services are provided in individual capacity and flashback in service tax regime it was specifically mentioned however in GST whether all the services provided by the director would be covered under RCM please assist

    1. Anita Bhadra says:

      rental service provided by the director would be covered under RCM.
      All services other than Salary to full-time directors are covered under RCM

      1. Prem Prakash says:

        Is the services by a director to the company covered under sction 9(3) or 9(4) of CGST act?? If covered under 9(4) then is company liable to pay GST under RCM?

      2. Pratik Anand says:


        Is RCM on rental applicable for normal directors also or is this applicable only for independent directors not on payroll of the company.
        If a director draws salary and rent from a company whether RCM will be applicable in case of full time employment?

        1. Anita Bhadra says:

          RCM is applicable to the directors who are not on the payroll.
          RCM is not applicable to the director draws salary and rent from a company, in case of full-time employment

  10. Anil Gupta says:

    Nicely presented. It is learnt that RCM under sec 9(4) of CGST Act is exempt, whereas Sec 9(3) continues to apply. Hence RCM under other expense heads of profit and loss account may also be payable, like audit fee, accounting charges, printing and stationery etc. Please clarify

    1. Anita Bhadra says:

      Dear Sir
      RCM under 9(4) is only for specified goods/services or a specific category of the supplier notified by the Government. At present, the only one notification has been issued under sec 9(4) issued ( Purchase of Cement)
      RCM not applicable on other heads under P & L like audit fee etc

  11. Partho says:

    I found the article very helpful. Concise & well presented articles like this enables us to be in touch with studies which is debilitated mostly by pressures from other spheres of life. Kudos for the article. We look forward to such articles in future.

  12. Sandeep Ghosh says:

    Very nicely presented. One question on Business Correspondent – Does it include Management consultants? or precisely who are Business correspondents

    1. Anita Bhadra says:

      Dear Sir
      Thanks for ur kind words.
      Bank correspondence is not a management consultant. As per RBI guidelines, Banks avail services of correspondents who visits assigned areas and work on behalf of Bank

        1. Anita Bhadra says:

          Business correspondents are bank representatives.
          They help villagers to open bank accounts. Business Correspondents get commission from bank for every new account opening, every transaction made via them.
          GST on such commission falls under RCM

  13. Niraj says:

    In the list the services by directors ( excluding remuneration) are under reverse charge. It is no where given the word EXCLUDING REMUNERATION) . Can it be clarified how these words are included.

    1. Anita Bhadra says:

      Dear Sir
      Payment of remuneration change the relationship as an employee & employer and
      Section 62(1)(b) of the Companies Act, 2013 defines an employee means
      a director of the company, whether a whole-time director or not but excluding an independent director;

      Recent AAR created confusion ,

      1. praveen says:

        Namaste Madam..
        Does purchase of Jelly Stones and M- sand also Attracts RCM as per [No.07/2019-Central Tax (Rate)] Dated: 29th March, 2019…
        please Clarify

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