How reverse charge works
Under reverse charge, the recipient pays GST instead of the supplier. The supplies covered are notified under s.9(3) and s.9(4) of the CGST Act, and s.5(3) and s.5(4) of the IGST Act. Tax must be paid in cash, because ITC can only be used against output tax and RCM tax is not output tax. Once paid, it can be claimed back as credit in the same return if the purchase is used for business and not blocked. Report the liability in GSTR-3B Table 3.1(d) and the credit in Table 4(A)(3), or 4(A)(2) for imported services. RCM entries do not go through the Invoice Management System.
Changes since 2024
- Renting of commercial property by an unregistered landlord to a registered tenant: RCM from 10 October 2024. Tenants under composition are excluded from 16 January 2025.
- Metal scrap sold by unregistered persons to registered persons: RCM from 10 October 2024. Registered sellers charge GST, and the buyer deducts 2% TDS.
- Sponsorship by a body corporate: forward charge from 16 January 2025.
- Self-invoice for supplies from unregistered persons must be issued within 30 days (Rule 47A, from 1 November 2024).
- From 22 September 2025 the rate structure moved to 5%, 18% and 40%. A GTA that opts for forward charge now has a choice of 5% without ITC or 18% with ITC, in place of 12%. The RCM rate on GTA remains 5% verify against the 22 September 2025 rate notifications.
Full RCM list
| Type | Supply | Supplier | Recipient who pays | Rate | Reference |
|---|---|---|---|---|---|
| Service | Goods transport agency (GTA) — road freight | GTA that has not opted to pay tax itself (Annexure V) | Factory, society, co-operative, registered person, body corporate, partnership firm/AOP, casual taxable person | 5% under RCM (recipient gets ITC). If the GTA opts for forward charge: 5% without ITC or 18% with ITC (18% replaced 12% from 22 Sep 2025) | 13/2017-CT(R) entry 1; Annexure V by 31 March for the next year |
| Service | Legal services by an advocate, firm of advocates or senior advocate | Individual advocate, senior advocate or firm of advocates | Business entity in India | 18% | 13/2017-CT(R) entry 2 |
| Service | Arbitral tribunal services | Arbitral tribunal | Business entity in India | 18% | 13/2017-CT(R) entry 3 |
| Service | Sponsorship services | Any person other than a body corporate (body corporates moved to forward charge from 16 Jan 2025) | Body corporate or partnership firm | 18% | 13/2017-CT(R) entry 4, as amended by 07/2025-CT(R) |
| Service | Services by Central/State Government, UT or local authority to a business | Central or State Government, Union territory, local authority | Business entity in India | 18% (unless exempt) | 13/2017-CT(R) entry 5 |
| Service | Renting of immovable property by Government or local authority | Central or State Government, Union territory, local authority | Registered person | 18% | 13/2017-CT(R) entry 5A |
| Service | Renting of a residential dwelling to a registered person | Any person | Registered person | 18% | 13/2017-CT(R) entry 5AA (from 18 Jul 2022) |
| Service | Renting of commercial property (other than residential dwelling) by an unregistered landlord | Unregistered person | Registered person other than a composition taxpayer | 18% | 13/2017-CT(R) entry 5AB (from 10 Oct 2024, 09/2024-CT(R)); composition excluded from 16 Jan 2025 (07/2025-CT(R)) |
| Service | Transfer of development rights, FSI or long-term lease premium to a promoter | Any person | Promoter of a real estate project | 18% verify | 13/2017-CT(R) entries 5B and 5C |
| Service | Director's services (non-employee director) | Director (not in employment) | Company or body corporate | 18% | 13/2017-CT(R) entry 6 |
| Service | Insurance agent services | Insurance agent | Insurance company | 18% | 13/2017-CT(R) entry 7 |
| Service | Recovery agent services | Recovery agent | Banking company, financial institution or NBFC | 18% | 13/2017-CT(R) entry 8 |
| Service | Copyright transfer or licence by an author, music composer, photographer or artist | Author, music composer, photographer, artist or the like | Publisher, music company, producer or the like | Rate for IP licensing under 11/2017-CT(R) verify | 13/2017-CT(R) entries 9 and 9A |
| Service | Direct selling agent (DSA) services | Individual DSA (not a body corporate, partnership or LLP) | Banking company or NBFC | 18% | 13/2017-CT(R) entry 11 verify |
| Service | Business facilitator services | Business facilitator | Banking company | 18% | 13/2017-CT(R) entry 12 verify |
| Service | Services of an agent of a business correspondent | Agent of business correspondent | Business correspondent | 18% | 13/2017-CT(R) entry 13 verify |
| Service | Security services (supply of security personnel) | Any person other than a body corporate | Registered person, except a composition taxpayer or a government department registered only for TDS | 18% | 13/2017-CT(R) entry 14 |
| Service | Renting of a motor vehicle to carry passengers, fuel included | Any person other than a body corporate who does not charge GST at the higher rate with ITC | Body corporate | 5% under RCM; supplier may instead charge 18% with ITC (was 12% before 22 Sep 2025) verify | 13/2017-CT(R) entry 15 |
| Service | Lending of securities under the SEBI SLB scheme | Lender of securities | Borrower | 18% verify | 13/2017-CT(R) entry 16 verify |
| Service | Import of services (supplier outside India) | Person in a non-taxable territory | Any person in India other than a non-taxable online recipient | IGST at the rate for the service | s.5(3) IGST Act; 10/2017-IT(R) entry 1 |
| Service | Ocean freight on CIF imports (foreign shipping line) | Foreign shipping line | Importer in India | No RCM | Entry omitted from 1 Oct 2023 after Union of India v. Mohit Minerals (SC, 19 May 2022) |
| Goods | Cashew nuts, not shelled or peeled | Agriculturist | Any registered person | 5% | 4/2017-CT(R) entry 1 |
| Goods | Bidi wrapper leaves (tendu) | Agriculturist | Any registered person | 18% verify | 4/2017-CT(R) entry 2 |
| Goods | Tobacco leaves | Agriculturist | Any registered person | Rate under 1/2017-CT(R) verify | 4/2017-CT(R) entry 3 |
| Goods | Silk yarn | Manufacturer of silk yarn from raw silk or cocoons | Any registered person | 5% | 4/2017-CT(R) entry 4 |
| Goods | Raw cotton | Agriculturist | Any registered person | 5% | 4/2017-CT(R) entry 5 |
| Goods | Lottery | State Government, Union territory or local authority | Lottery distributor or selling agent | 40% from 22 Sep 2025 verify | 4/2017-CT(R) entry 6 |
| Goods | Used vehicles, seized or confiscated goods, old goods, waste and scrap sold by Government | Central or State Government, Union territory, local authority | Registered person | Rate for the goods | 4/2017-CT(R) entry 7 |
| Goods | Priority sector lending certificate (PSLC) | Registered person | Registered person | Rate under 1/2017-CT(R) verify | 4/2017-CT(R) entry 8 |
| Goods | Metal scrap (chapters 72 to 81) | Unregistered person | Registered person | 18% | 4/2017-CT(R) entry 10, inserted by 06/2024-CT(R) from 10 Oct 2024 |
| Goods | Mentha oil and similar essential oils | Unregistered person | Registered person | 18% verify | 4/2017-CT(R) entry 9 verify |
| Goods | Purchases by a real estate promoter from unregistered suppliers (s.9(4)) | Unregistered supplier | Promoter of a residential real estate project paying 1%/5% without ITC | 18% on the shortfall below 80% of inputs/input services from registered suppliers; cement and capital goods at their own rates (cement 18% from 22 Sep 2025 verify) | s.9(4); 07/2019-CT(R) |
| Goods | Any other purchase from an unregistered supplier | Unregistered supplier | Registered person | No RCM | s.9(4) applies only to notified classes (from 1 Feb 2019) |
Common questions
Do I need to pay RCM on every purchase from an unregistered supplier?
No. Since 1 February 2019, s.9(4) covers only notified classes: promoters of real estate projects, metal scrap, commercial rent from an unregistered landlord and a few others. Ordinary purchases from unregistered suppliers carry no RCM.
Can I pay RCM using my input tax credit?
No. RCM tax must be paid from the electronic cash ledger. After paying it, you can claim the same amount as ITC in that month's return if it relates to your business and is not blocked.
Does a composition taxpayer pay RCM?
Yes, on notified supplies such as GTA, legal services or security services, at the normal rate, with no ITC. Composition taxpayers have been excluded from RCM on commercial rent from unregistered landlords since 16 January 2025.
When is the self-invoice due?
Within 30 days of receiving the goods or services from an unregistered supplier (Rule 47A, from 1 November 2024). Imported services are treated the same way, because the overseas supplier is not registered in India.