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Reverse Charge Mechanism Under GST - Know About List of Goods and Services Attract RCM


Usually, the seller collects taxes from the government and pays taxes to the government, but in certain cases, the buyer of the goods is responsible for paying the tax instead of the supplier.


The Reverse Charge Mechanism is divided into three sections:

  • Government Notified Services and Goods on that Reverse Charge is applicable

  • Supply of Goods by an unregistered person to the registered person. This was discontinued by the government

  • Notified goods or services supplied through e-commerce aggregators.


In the current article we will cover first scenarios about the various goods or services that are notified on which Reverse Charge Mechanism is applicable


Registration Requirement

As per Section 24 of the CGST Act, 2017, persons who are required to pay tax under reverse charge should register themselves compulsorily, irrespective of the turnover limit.


Supplies of goods under reverse charge mechanism

Sr. No.

Description of Supply of Goods

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

3Aa

Essential oil - Pepper mint (Mentha piperita)

Any unregistered person

Any registered person

3Ab

Essential oil - Other mints: Spearmint oil (exmenthaspicata), Water mint oil (exenthaaquatic), Horsemint oil (exmenthasylvestries), Bergament oil (exmenthacitrate)

Any unregistered person

Any registered person

4

Silk yarn

Person manufacturing silk yarn from raw silk or silk worm cocoons

Any registered person

4A

Raw cotton

Agriculturist

Any registered person

5

Supply of lottery

State Government, Union Territory, or any local authority

Lottery distributor or selling agent

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


 Supplies of services under reverse charge mechanism:

Sr no.

Description of supply of service

Supplier of service

Recipient of service

1

Any service supplied by any person who is located in non-taxable territory to any person other than a non-taxable online recipient.

Any person located in a non-taxable territory.

Any person located in the taxable territory other than a non-taxable online recipient.

2

GTA service

Goods Transport Agency (GTA) who has not paid integrated tax at the rate of 12%

Any factory, society, cooperative society, registered person, body corporate, partnership firm, or casual taxable person; located in the taxable territory

3

Legal Services by advocate

An individual advocate including a senior advocate or firm of advocates

Any business entity located in the taxable territory

4

Services supplied by an arbitral tribunal to a business entity

An arbitral tribunal

Any business entity located in the taxable territory

5

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

6

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

Central Government,

State Government, Union territory or local authority

Any business entity located in the taxable territory


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

8

Services supplied by an insurance agent to any person carrying on insurance business

An insurance agent or Non Corporate DSA

Any person carrying on insurance business, located in the taxable territory

9

Services supplied by a recovery agent or DSA ( non corporate DSA) 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, located in the taxable territory

10

Service of renting of residential dwelling to a registered person

Any Person

Any Registered Person

11

Supply of services by 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 13(1)(a) of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works to a publisher, music company, producer or

Author or music composer, photograph

her, artist, or the like

Publisher, music company, producer or the like, located in the taxable territory

12

Service supplied by any person by way of transfer of TDS or FSI for construction of a project by promoter

Any Person

Promoter

13

Long Term Lease of Projects (30 years or more) by any person against consideration in any form of upfront premium (called as premium, salami, cost, price , development charges or any other name) and/or periodic rent for construction of a project by promoter

Any Person

Promoter

14

Services Provided by way of renting of any motor vehicle to carry passengers where the cost of fuel is included in the consideration charged from the service recipient

Any person other than a body corporate who supplies service to a body corporate & doesn’t include invoice charging GST @12% of the service recipient

Anybody corporate located in taxable territory


Stay tuned with us for our upcoming article on reverse charge which explains the complexities and compliances of each type of different service of reverse charge.

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