GST Reverse Charge Mechanism (RCM) Explained (2026)
What reverse charge is, common cases where the buyer pays GST instead of the seller, and how to record it correctly.
Normally the seller collects and pays GST. Under the reverse charge mechanism (RCM), the buyer pays the tax to the government directly for certain supplies. Here is when it applies and how to handle it. This is general information, not tax advice — GST rules, rates and thresholds change and vary by case, so confirm specifics with a qualified professional or the official GST portal.
What reverse charge means
For notified goods, services and some purchases from unregistered suppliers, the recipient is liable to pay GST instead of the supplier, and reports it in their returns.
Common RCM cases
- Specific notified goods and services
- Certain purchases from unregistered dealers
- Import of services
- Services like goods transport agency (GTA) in defined cases
Recording it right
RCM affects both your liability and your input credit, so accurate records matter. Keep purchases and expenses in one system tied to GST — MyGroce records purchase and expense data that your accountant can map to RCM correctly.
Frequently asked questions
What is reverse charge under GST?
Under RCM, the buyer pays GST directly to the government for certain supplies instead of the seller. It affects your liability and input credit, so keep clean purchase records.
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