RCM (Reverse Charge Mechanism)
In this article we discuss the concept of RCM. Normally the liability to pay the GST arise on service provider but in some cases the liability to pay GST sifting to the service recipient.
Time of Supply (In case of RCM):-
In case of Supply of services (Earliest of the followings):-
- Date of payment as per books or date of debit in the bank account, whichever is earlier or
- The date immediately following 60 days from the date of issue of invoice or similar other documents.
In case of Supply of Goods (Earliest of the followings):-
- Date of receipt of the goods or
- Date of payment as per books or date of debit in the bank account, whichever is earlier or
- The date immediately following 30 days from the date of issue of invoice or similar other documents.
Payment of GST liability under RCM:-
The payment under reverse charge must be paid in cash/bank. So, this liability cannot be discharge by using input tax credit.
Eligibility of ITC under RCM:-
The recipient of the services after discharge his liability can take the Input tax credit if he is eligible.
The ITC of the GST paid under reverse charge can be taken in the same month for which period it is relate but in this case GST must be deposited within the due date i.e. 20th of following month otherwise he take the ITC in the month of in which he make the payment of GST.
List of Services notified for RCM under section 9(3) of CGST Act:-
| S.No. | Particulars of services | Supplier of services | Recipient of services |
| 1. | Taxable service Provided or agreed to be provided | Any person located in a non-taxable territory | Any person located in the taxable territory other than non-taxable online recipient (OIDAR). |
| 2. | GTA Services | GTA (Goods Transport Agency) | Any Factory, society, co-operative society, registered person, body corporate, partnership firm including LLP, casual taxable person, located in taxable territory. |
| 3. | Legal Services of Advocate | An individual advocate or firm of advocates | Any business entity located in the taxable territory |
| 4. | Services of an arbitral tribunal | An arbitral tribunal | Any business entity located in the taxable territory |
| 5. | Sponsorship services | Any person | Anybody corporate or partnership firm located in the taxable territory |
| 6. | Services provided or agreed to be provided by Government or local authority 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 Government; (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. | Government or local authority | Any business entity located in the taxable territory |
| 7. | 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 CGST Act, 2017 (Inserted vide Notification No. 3/2018 – Central Tax (Rate) dated 25.01.2018) | Central Government, State Government, Union territory or local authority | Any person registered under the CGST Act, 2017 |
| 8. | Services provided or agreed to be provided 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 | A company or a body corporate |
| 9. | Services provided or agreed to be provided by an insurance agent to any person carrying on insurance business | An insurance agent | Any person carrying on insurance business. |
| 10. | Services provided or agreed to be provided 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 nonbanking financial company. |
| 11. | Services by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India | A person located in non-taxable territory | Importer as defined under clause (26) of section 2 of the Customs Act, 1962. |
| 12. | 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, dramatic, musical or artistic works | Author or music composer, photographer, artist, etc. | Publisher, Music company, Producer |
| 13. | Supply of services by the members of Overseeing Committee to Reserve Bank of India | Members of Overseeing Committee constituted by the Reserve Bank of India | Reserve Bank of India. |
| 14. | Radio taxi or Passenger Transport Services provided through electronic commerce operator | Taxi driver or Rent a cab operator | Any person (100% by Electronic Commerce Operator) |
List of Goods notified for RCM under section 9(3) of CGST Act:-
| S.No. | Particulars of goods | Supplier of goods | Recipient of goods |
| 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 yarn from raw silk or silk worm cocoons for supply of silk yarn | Any registered person |
| 5. | Raw Cotton | Agriculturist | Any registered person |
| 6. | Supply of Lottery | State government, Union Territory or any local authority | Lottery distributor or selling agent |
| 7. | Used Vehicles, seized and confiscated goods, old and used goods, waste and scrap | Central government, State government, Union Territory or any local authority |