Definition Sec-2(98)

Reverse charge means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act.

Levy and Collection Sec-9

Sec-9(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

Sec-9(4) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

Reverse Charge under GST

Time of supply under RCM

For Goods Sec-12(3) the time of supply shall be the earliest of the following dates-

1. the date of the receipt of goods; or

2. the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or

3. the date immediately following thirty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:

Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the books of account of the recipient of supply.

For Services Sec-13(3) the time of supply shall be the earlier of the following dates-

1. the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier.

2. the date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier.

Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply

Goods notified under Sec-9(3) for RCM

As per Notification no.4/2017- Central Tax (Rate), dated 28-6-2017 as amended by Notifications no.36/2017-Central Tax (rate), dated 13-10-2017no.43/2017-Central Tax (rate), dated 14-11-2017 and no.11/2018-Central Tax (rate), dated 28-5-2018. The following supply of goods comes under Reverse Charge.

Sl NO. Particulars Supplier of goods Recipient of Supply
1 Cashew nuts, not shelled or peeled Agriculturist Any Registered Person
2 Bidi wrapper leaves (tendu) Agriculturist Any Registered Person
3 Tobacco leaves Agriculturist Any Registered Person
4 Silk yarn Any person who manufactures silk yam from raw silk or silk worm cocoons for supply of silk yarn Any Registered Person
4A Raw Cotton Agriculturist Any Registered Person
5 Lottery State Government, Union Territory or any local authority Lottery distributor or selling agent.

Explanation.—For the purposes of this entry, lottery distributor or selling agent has the same meaning as assigned to it in clause (c) of Rule 2 of the Lotteries (Regulation) Rules, 2010, made under the provisions of sub-section (1) of section 11 of the Lotteries (Regulation) Act, 1998 (17 of 1998).

6 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
7 Priority Sector Lending Certificate Any Registered Person Any Registered Person

Services notified under Sec-9(3) for RCM

Notification no. 13/2017- Central Tax (rate), dated 28-6-2017, corrected by Corrigendum GSR 1199(e), dated 25-9-2017, amended by Notification no. 22/2017-Central Tax (rate), dated 22-8-2017Notification no. 33/2017-Central Tax (rate), dated 13-10-2017, Notification no. 3/2018-Central Tax (rate), dated 25-1-2018Notification no. 15/2018-Central Tax (rate), dated 26-7-2018Notification no. 29/2018-Central Tax (rate), dated 31-12-2018Notification no. 5/2019-Central Tax (rate), dated 29-3-2019 and Notification no. 22/2019-Central Tax (rate), dated 30-9-2019Notification no. 29/2019- Central Tax (rate), dated 31-12-2019

As per above notifications following supply of services comes under RCM

List of services falling under RCM

SL No. Particulars Supplier of the Service Recipient of the Service
1 Supply of Services by a goods transport agency (GTA), who has not paid central tax at the rate of 6%, in respect of transportation of goods by road to

a) any factory registered under or governed by the Factories Act, 1948.

b)  any society registered under the Societies Registration Act, 1860.

c)  any co-operative society established by or under any law.

d)  any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act.

e) any body corporate established, by or under any law.

f) any partnership firm whether registered or not under any law including association of persons.

g) any casual taxable person. 

Provided that nothing contained in this entry shall apply to services provided by a goods transport agency, by way of transport of goods in a goods carriage by road, to

a)   A Department or Establishment of the Central Government or State Government or Union territory.

b) Local Authority.

c)Government Agencies.

which has taken registration under the Central Goods and Services Tax Act, 2017 only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services.

Goods Transport Agency, GTA a) any factory registered under or governed by the Factories Act, 1948.

b) any society registered under the Societies Registration Act, 1860.

c) any co-operative society established by or under any law.

d) any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act.

e) any body corporate established, by or under any law.

f) any partnership firm whether registered or not under any law including association of persons.

g)  any casual taxable person.

2 Services provided by an individual advocate including a senior advocate or firm of advocates by way of legal services, directly or indirectly.

Explanation – Legal Services means any services provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority.

An individual advocate including a senior advocate or firm of advocates. Any business entity located in the taxable territory.
3 Services supplied by an arbitral tribunal to a business entity. An arbitral tribunal. Any business entity located in the taxable territory.
4 Services provided by way of sponsorship to any body corporate or partnership firm. Any person Any body corporate or partnership firm located in the taxable territory.
5 Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding

a) renting of immovable property.

b)  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.

Central Government, State Government, Union territory or local authority. Any business entity located in the taxable territory.
5A 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 Central Government, State Government, Union territory or local authority. Any person registered under the Central Goods and Services Tax Act, 2017.
5B 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
5C 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
6 Services supplied by a director of a company or a body corporate to the said company or the body corporate A director of a company or a body corporate. The company or a body corporate located in the taxable territory.
7 Services supplied by an insurance agent to any person carrying on insurance business. An Insurance Agent Any person carrying on insurance business, located in the taxable territory.
8 Services supplied by a recovery agent to a banking company or a financial institution or a non-banking financial company. A recovery agent A banking company or a financial institution or a non-banking financial company, located in the taxable territory.
9 Supply of services by a music composer, photographer, artist or the like by way of transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 relating to original dramatic, musical or artistic works to a music company, producer or the like. Music composer, photographer, artist, or the like Music company, producer or the like, located in the taxable territory
9A Supply of services by an author by way of transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 relating to original literary works to a publisher. Author Publisher located in the taxable territory

Provided that nothing contained in this entry shall apply where

1.     the author has taken registration under the Central Goods and Services Tax Act, 2017, and filed a declaration, in the form at Annexure I, within the time limit prescribed therein, with the jurisdictional CGST or SGST Commissioner, that he exercises the option to pay central tax, under forward charge in accordance with section 9(1) of the Central Goods and Services Tax Act, 2017.

2.     the author makes a declaration, as prescribed in Annexure II on the invoice issued by him in Form GST Inv-I to the publisher.

10 Supply of services by the members of Overseeing Committee to Reserve Bank of India Members of Over-seeing Committee constituted by the Reserve Bank of India Reserve Bank of India.
11 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.
12 Services provided by business facilitator (BF) to a banking company Business facilitator (BF) A banking company, located in the taxable territory.
13 Services provided by an agent of business correspondent (BC) to business correspondent (BC) An agent of business correspondent (BC) A business correspondent, located in the taxable territory.
14 Security services (services provided by way of supply of security personnel) provided to a registered person.

Provided that nothing contained in this entry shall apply to

1.     a Department or Establishment of the Central Government or State Government or Union territory or local authority or Governmental agencies, which has taken registration under the Central Goods and Services Tax Act, 2017  only for the purpose of deducting tax under section 51 of the said Act and not for making a taxable supply of goods or services.

2.      a registered person paying tax under section 10 of the said Act.

Any person other than Body Corporate Registered person located in taxable territory.
15 Services provided by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient, provided to a body corporate. 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 territory.
16 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 authorized 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.

Goods & Services notified under Sec-9(4) for RCM

As per Notification no. 7/2019- Central Tax (rate), dated 29-3-2019 as amended by notification no. 24/2019-central tax (rate), dated 30-9-2019. The following supply of Goods and Services or both received from an unregistered supplier by a registered person comes under the Reverse Charge-

SL no Particulars Recipient of the Supply
1 Supply of such goods and services or both [other than services by way of grant of development rights, long term lease of land (against upfront payment in the form of premium, salami, development charges, etc.) or FSI (including additional FSI)] which constitute the shortfall from the minimum value of goods or services or both required to be purchased by a promoter for construction of project, in a financial year (or part of the financial year till the date of issuance of completion certificate or first occupation, whichever is earlier) as prescribed in Notification No. 11/ 2017-Central Tax (Rate), dated 28th June, 2017, at items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, published in Gazette of India vide G.S.R. No. 690, dated 28th June, 2017, as amended. Promoter
2 Cement falling in Chapter Heading 2523 in the First Schedule to the Customs Tariff Act, 1975 Promoter
3 Capital goods falling under any chapter in the first schedule to the Customs Tariff Act, 1975. supplied to a promoter for construction of a project on which tax is payable or paid at the rate prescribed for items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, in notification No. 11/2017-Central Tax (Rate), dated 28th June, 2017, published in Gazette of India vide G.S.R. No. 690, dated 28th June, 2017, as amended. Promoter

Compulsory Registration for Receiver

As per Sec-24(iii) Person who are required to pay tax under reverse charge has to obtain compulsory registration irrespective of the threshold limit of turnover.

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