Reverse charge mechanism in GST: when the buyer pays the tax
Normally the supplier collects GST and pays it to the government. For a list of notified supplies the law flips this, and the recipient pays the tax directly. Businesses miss reverse charge most often on legal fees, freight and rent, and the department finds it in the annual return.
Reviewed by Vijay Dhawan, Managing Partner, LexVerge LLP, on · Published
Quick answer
Under the reverse charge mechanism (RCM) the recipient, not the supplier, pays GST on notified supplies: for example goods transport agency services, legal services by an advocate, services of a director, sponsorship, security services from a non-company, renting of a residential dwelling to a registered person (from 18 July 2022) and renting of commercial property by an unregistered landlord to a registered tenant (from 10 October 2024). RCM tax must be paid in cash, not from input tax credit, and can then be claimed back as ITC if the usual conditions are met.
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Common supplies under reverse charge
| Supply | Who pays the GST |
|---|---|
| Goods transport agency services, in the notified cases | The business recipient |
| Legal services by an advocate or firm of advocates | A business entity receiving them |
| Services of a director to the company | The company |
| Sponsorship services | A body corporate or firm receiving them |
| Security services by a person other than a body corporate | A registered recipient, subject to the notified exceptions |
| Renting of a residential dwelling | A registered tenant, from 18 July 2022 |
| Renting of commercial property by an unregistered landlord | A registered tenant, from 10 October 2024 |
| Import of services | The recipient in India, under the IGST Act |
The list comes from Notification 13/2017-Central Tax (Rate) as amended, under section 9(3) of the CGST Act; each entry has its own conditions, so check the exact supplier and recipient before applying it. Our GST on rent guide covers the rent cases in detail.
Paying RCM and claiming the credit
- Where the supplier is unregistered, issue a self-invoice within 30 days of receiving the goods or services (rule 47A), and a payment voucher when you pay.
- Report the tax in GSTR-3B for the month in which the time of supply falls, and pay it from the electronic cash ledger.
- Claim the same amount as input tax credit in that GSTR-3B, if the supply is used for business and the credit is not blocked.
Time of supply under reverse charge
| Time of supply is the earliest of | |
|---|---|
| Goods | Receipt of the goods; the date of payment entered in your books or debited in your bank, whichever is earlier; or the day after 30 days from the supplier’s invoice |
| Services | The date of payment entered in your books or debited in your bank, whichever is earlier; or the day after 60 days from the supplier’s invoice |
Where none of these can be worked out, the date of entry in your books applies. RCM paid in a later month than the one it belongs to carries interest.
Frequently asked questions
What is reverse charge mechanism in GST?
A system under which the recipient of a notified supply pays the GST directly to the government instead of the supplier, under section 9(3) or 9(4) of the CGST Act.
Can RCM be paid using input tax credit?
No. Tax under reverse charge must be paid in cash from the electronic cash ledger. The amount paid can then be claimed as input tax credit if the conditions are met.
Is GST on rent payable under reverse charge?
Yes, in two cases: a registered person renting a residential dwelling (from 18 July 2022), and a registered person renting commercial property from an unregistered landlord (from 10 October 2024).
Is a self-invoice needed under reverse charge?
Yes, where the supplier is unregistered. The recipient issues it within 30 days of receiving the goods or services, under rule 47A.
Is legal fee paid to an advocate under reverse charge?
Yes. Legal services by an advocate or firm of advocates to a business entity are taxed under reverse charge, so the business pays the GST.
GST Return Filing from ₹149 a month, by a CA.
GSTR-1 and GSTR-3B every cycle, reconciled against GSTR-2B before filing.
Professional fee shown; government charges at actuals, quoted in writing before you pay. GST at 18% extra.
See what is included and the full pricePaying legal fees, freight or rent?
We map your reverse charge liabilities, pay them in cash and reclaim the credit in the same GSTR-3B, from ₹449 a month.
Keep reading.
GST on Rent in 2026: Commercial and Residential Property, Forward Charge vs Reverse Charge, and Who Actually Pays
18% on commercial rent, reverse charge when the landlord is unregistered, the residential rule for registered tenants, and whether you get the credit.
Read guide→GuideInput Tax Credit Under GST: The Four Conditions, GSTR-2B and IMS, the Time Limit, the 180-Day Rule and the Blocked Credits
The four conditions for credit, why GSTR-2B and the invoice management system now decide it, the 30 November deadline, the 180-day rule and the blocked list.
Read guide→Official references
The statutory sources behind this page. We keep our guidance aligned to them: verify anything time-sensitive directly.
- Ministry of Corporate AffairsCompanies Act filings, forms and fee schedules
- Income Tax DepartmentReturns, forms, rates and e-filing utilities
- GST PortalRegistration, returns and rate notifications
Facts on this page are checked against these sources; the date of the last check is shown at the top of the page. It is general guidance, not advice on your specific facts. How we write and check our guides.