What is the reverse charge mechanism in GST?

Reverse charge is an arrangement where the recipient of a supply, rather than the supplier, is liable to pay GST to the government. It applies to specified categories of goods and services notified under Section 9(3) of the CGST Act, to certain purchases from unregistered suppliers under Section 9(4), and to specified supplies through e-commerce operators under Section 9(5). The aim is to collect tax efficiently from sectors that are hard to tax at source — such as individual transporters, advocates, and farmers — by shifting the obligation to the typically registered buyer.

Who has to pay GST under reverse charge?

The recipient of the supply pays it. For example, a company receiving services from its director, a business receiving legal services from an advocate, or a registered buyer purchasing raw cotton from an agriculturist all pay the GST directly to the government instead of the supplier collecting it. The recipient must be registered and discharge the liability; suppliers who deal only in reverse-charge supplies are often not required to register, since the buyer handles the tax.

Can I pay reverse charge GST using input tax credit?

No. Reverse-charge liability must be paid in cash, by depositing the amount in the electronic cash ledger — it cannot be set off against the balance in your electronic credit ledger. Once the reverse-charge tax has been paid, you can then claim input tax credit on it where the supply is otherwise eligible for credit. This pay-first, claim-later sequence is a common source of error, so it is worth building into your monthly filing routine.

Does reverse charge apply to purchases from unregistered suppliers?

It can, but only for notified classes of supplies under Section 9(4), not for every purchase from an unregistered dealer. The broad reverse charge on all unregistered purchases that existed briefly in the early GST period was suspended, and the current position applies Section 9(4) to specified cases — such as certain supplies to promoters in real estate. For the notified goods in this tool, like raw cotton or cashew, reverse charge applies when the supplier is an agriculturist or unregistered, and the registered buyer must self-invoice and pay.

Is sponsorship still under reverse charge?

This is exactly the kind of entry to verify, which is why the tool flags it. Sponsorship to a body corporate or partnership firm has long been a reverse-charge service at 18%, but guidance in 2025 indicates a shift in its treatment toward forward charge. Because the position has moved, you should confirm the current status against the latest CBIC notification before deciding who pays — the tool marks contested categories with a “Verify” badge rather than asserting a single answer that may be out of date.

What happens if I miss a reverse charge liability?

A missed reverse-charge payment typically surfaces as a mismatch in GSTR-2B and can lead to denial of the related input tax credit, interest on the unpaid tax, and scrutiny from the department. Because the liability is the recipient’s, the supplier not charging GST is not a defence. The practical safeguard is to review reverse-charge exposure each filing cycle — transporters, advocates, directors, security agencies, and notified goods are the usual triggers — and to self-invoice and pay promptly so the credit is not lost.

GST

GST Reverse Charge (RCM) Checker

Check whether a supply falls under reverse charge — and who actually has to pay the GST, you or your supplier.

By the Samastam teamLast updated 2026-06-15Editorial standards

Check a supply

Service or good

Search by the kind of supply, the supplier, or the recipient.

Type

If RCM applies

—The recipient raises a self-invoice for the supply.
—RCM tax is paid in cash — it cannot be set off against input tax credit.
—Input tax credit on the RCM tax can be claimed only after the tax is paid.

Matches

23 categories

Goods Transport Agency (GTA) — road transport
Section 9(3) · 5%
Recipient pays
Supplier
A GTA charging 5% GST without ITC that has not opted for forward charge
Pays GST
Factory, society, co-operative, body corporate, partnership firm, casual taxable person, or any GST-registered person
No RCM if the GTA opts to charge 12% GST with ITC, or has filed the annual forward-charge declaration.
Legal services by an advocate or law firm
Section 9(3) · 18%
Recipient pays
Supplier
Individual advocate, senior advocate, or law firm (including LLP)
Pays GST
Any business entity in the taxable territory
Covers advisory, consultancy, and representation before courts, tribunals, and authorities.
Services by an arbitral tribunal
Section 9(3) · 18%
Recipient pays
Supplier
Arbitral tribunal
Pays GST
Any business entity
Services by a company director
Section 9(3) · 18%
Recipient pays
Supplier
A director of a company (in their capacity as director)
Pays GST
The company
Applies to services provided by a director that are not under an employer-employee contract.
Services by an insurance agent
Section 9(3) · 18%
Recipient pays
Supplier
Insurance agent
Pays GST
The insurance company
Services by a recovery agent
Section 9(3) · 18%
Recipient pays
Supplier
Recovery agent
Pays GST
Bank, financial institution, or NBFC
Security services (manpower)
Section 9(3) · 18%
Recipient pays
Supplier
A non-body-corporate (individual or firm) providing security personnel
Pays GST
A registered person
Not applicable where the supplier is a body corporate, or the recipient is under the composition scheme or registered only for TDS under Section 51.
Renting of a motor vehicle
Section 9(3) · 5%
Recipient pays
Supplier
A non-body-corporate renting a motor vehicle (with operator) and charging 5% without ITC
Pays GST
A body corporate
Only when the supplier charges 5% without ITC. If the supplier charges 12% with ITC, RCM does not apply.
Transfer/use of copyright by an author or artist
Section 9(3) · 12–18%
Recipient pays
Supplier
Author, music composer, photographer, artist, or similar creator
Pays GST
Publisher, music company, or producer
For literary works to a publisher, RCM applies only if the author has not opted for forward charge by declaration.
Services by Government or a local authority
Section 9(3) · Varies
Recipient pays
Supplier
Central/State Government, Union Territory, or local authority
Pays GST
Any business entity
Excludes some services (e.g. transport, postal, aircraft/vessel services). Includes renting of immovable property to a registered person, transfer of development rights/FSI, and long-term (30+ year) land leases for construction.
Services by an individual Direct Selling Agent (DSA)
Section 9(3) · 18%
Recipient pays
Supplier
An individual DSA (not a company or firm)
Pays GST
Bank or NBFC
Business facilitator services to a bank
Section 9(3) · 18%
Recipient pays
Supplier
Business facilitator
Pays GST
Bank
Business correspondent agent services
Section 9(3) · 18%
Recipient pays
Supplier
Agent of a business correspondent
Pays GST
The business correspondent
Specified supplies via an e-commerce operator
Section 9(5) · Varies
Recipient pays
Supplier
Driver / hotel / service provider supplying through an e-commerce platform
Pays GST
The e-commerce operator (platform)
Covers radio-taxi/cab, accommodation, and housekeeping supplied through a platform — the operator pays GST unless the underlying provider is itself required to register.
Import of services
Section 5(3) IGST · IGST at the applicable rate
Recipient pays
Supplier
A person located in a non-taxable territory (outside India)
Pays GST
The recipient in India
Sponsorship services
Section 9(3) · 18%
Verify
Supplier
Any person providing sponsorship
Pays GST
Body corporate or partnership firm
Recently changed: some 2025 guidance moves sponsorship to forward charge (supplier pays). Confirm the current position against the latest CBIC notification before treating it as RCM.
Raw cashew nuts (unpeeled)
Section 9(3) · 5%
Recipient pays
Supplier
Agriculturist (typically unregistered)
Pays GST
Registered buyer
Common in food processing. RCM where the supplier is an agriculturist.
Tobacco / bidi wrapper (tendu) leaves
Section 9(3) · As notified
Recipient pays
Supplier
Forest gatherer or commission agent
Pays GST
Registered business
Tendu leaves
Section 9(3) · 5%
Recipient pays
Supplier
Unregistered forest contractor / gatherer
Pays GST
Registered buyer
Silk yarn
Section 9(3) · 5%
Recipient pays
Supplier
Manufacturer of silk yarn from raw silk / cocoons (unregistered)
Pays GST
Registered textile unit
Raw cotton
Section 9(3) · 5%
Recipient pays
Supplier
Agriculturist
Pays GST
Registered buyer
Comes up often in textile and fabric businesses.
Second-hand goods / used vehicles (margin scheme)
Section 9(4) · Depends on margin
Recipient pays
Supplier
Unregistered person
Pays GST
Registered reseller / dealer
Applies where the dealer follows the margin scheme.
Import of goods
Customs / IGST · IGST per customs
Recipient pays
Supplier
Foreign exporter
Pays GST
Indian importer
IGST on imports is collected through customs at the point of clearance.

Notified RCM list as of April 2025. Reverse-charge applicability often depends on the supplier and recipient status and can change at GST Council meetings — always confirm against the current CBIC notification before self-invoicing or claiming credit.

→ Calculate the GST → Invoice Generator

Under the reverse charge mechanism, the buyer — not the supplier — pays the GST on certain notified supplies and on some purchases from unregistered dealers. Search the kind of service or good and this tool shows whether reverse charge applies, who is liable, the rate, the governing section, and the conditions that decide it.

Key takeaways

Reverse charge (RCM) shifts the GST liability from the supplier to the recipient for notified categories such as goods transport, legal services, director services, and security services.
Common RCM goods include raw cotton, raw cashew, silk yarn, and tendu leaves — typically when bought from an agriculturist or unregistered supplier.
Applicability often depends on conditions: GTA reverse charge applies only when the transporter charges 5% without ITC, and security-service RCM only when the supplier is not a body corporate.
Where RCM applies, the recipient self-invoices, pays the tax in cash (not from credit), and can claim input tax credit only after paying.
The notified list changes at GST Council meetings — sponsorship is a current example where the position has shifted — so contested entries are flagged to verify.

What this is and why it matters

In the normal course of GST, the supplier adds tax to the invoice, collects it from the buyer, and pays it to the government — this is forward charge. The reverse charge mechanism flips that arrangement for specified supplies: the supplier does not charge GST, and the recipient becomes directly liable to pay it to the government instead. The government uses reverse charge to bring hard-to-tax and unorganised sectors into the net — think individual goods transporters, advocates, or farmers selling raw cotton — by collecting the tax from the typically larger, registered buyer rather than from many small suppliers. It is governed by Section 9(3) of the CGST and SGST Acts for notified goods and services, Section 9(4) for certain purchases from unregistered suppliers, and Section 9(5) for specified supplies made through e-commerce operators, with the parallel Section 5 provisions of the IGST Act covering inter-state supplies and imports.

The reason a checker matters is that reverse charge is one of the most error-prone areas of GST compliance, because applicability turns on a combination of factors rather than a single label. The same service can be forward charge or reverse charge depending on who supplies it and who receives it: security services are under reverse charge when supplied by an individual or firm to a registered business, but not when the supplier is a company; goods transport is under reverse charge only when the transporter charges 5% without input tax credit and has not opted for forward charge. Getting this wrong has real consequences — a missed reverse-charge liability shows up as a mismatch in GSTR-2B, can lead to denied input tax credit, and invites scrutiny notices, while wrongly applying it means paying tax that was never due. This tool lays out, for each notified category, exactly who supplies it, who pays the GST, the rate, and the conditions, so you can see not just whether reverse charge might apply but why.

How to use this tool

Type the kind of supply you are dealing with into the search box — the name of the service or good (“legal”, “transport”, “director”, “security”, “cashew”), or even the supplier or recipient you have in mind. The list filters to the notified reverse-charge categories that match. Use the Services and Goods chips to narrow the list to one type when you are browsing rather than searching for a single item.

Each matching category is shown as a card with a clear badge: “Recipient pays” for a settled reverse-charge category, or “Verify” for one whose position has recently changed. The card states the supplier and the recipient who actually pays the GST in plain language, along with the rate and the governing section. Read the conditions carefully, because they are usually what decides the answer: a goods transport agency triggers reverse charge only when it charges 5% without input tax credit and has not opted for forward charge, and renting of a motor vehicle only when the supplier charges 5% without credit. Where a caveat appears under a card, it is telling you the fact you need to confirm about your specific supplier before concluding.

If a category applies to your supply, remember the standing obligations shown alongside the search: you must raise a self-invoice for the purchase, pay the reverse-charge GST in cash because it cannot be set off against your input tax credit, and only then claim that credit back where eligible. When nothing matches your search, the supply is most likely under ordinary forward charge, where your supplier charges and remits the GST. Because the notified list is revised at GST Council meetings, treat the result as a guide that surfaces the conditions — not a final ruling — and confirm anything contested or unusual against the current CBIC notification before you file.

Examples and use cases

A goods transporter charging 5%

A registered manufacturer hires a goods transport agency that bills 5% GST without input tax credit. Searching “transport” shows GTA services under reverse charge: the manufacturer, as a registered recipient, pays the 5% GST directly to the government and self-invoices for it. The card’s caveat is the deciding fact — had the transporter opted to charge 12% with credit, reverse charge would not apply and the transporter would handle the tax instead.

An advocate billing a company

A private company engages an individual advocate for contract advice. Searching “legal” or “advocate” confirms reverse charge at 18%: the advocate does not charge GST, and the company self-invoices and pays the 18% to the government. Because the recipient is a business entity in the taxable territory, the condition is met — the same advocate billing a private individual would not trigger reverse charge.

Security guards from a proprietorship firm

A registered shop hires security guards from a local proprietorship (a non-body-corporate). Searching “security” shows reverse charge at 18%, with the shop liable. The caveat matters: if the security agency had been a private limited company, the supply would be forward charge and the agency would bill GST normally. The supplier’s legal form is what flips the liability.

Raw cotton from a farmer

A textile unit buys raw cotton directly from an agriculturist. Searching “cotton” shows it as a reverse-charge good at 5%: the registered textile unit pays the GST to the government rather than the farmer collecting it. This is the classic agricultural reverse-charge case — the buyer self-invoices and the unorganised supplier is kept outside the compliance burden.

A cab booked through an app

A passenger books a ride through an e-commerce platform. Searching “cab” or “ecommerce” shows the Section 9(5) treatment: the platform — not the individual driver — is liable to pay the GST on the radio-taxi service. This is reverse charge of a different kind, placing the liability on the operator that controls the transaction rather than on the small supplier behind it.

Frequently asked questions

What is the reverse charge mechanism in GST?: Reverse charge is an arrangement where the recipient of a supply, rather than the supplier, is liable to pay GST to the government. It applies to specified categories of goods and services notified under Section 9(3) of the CGST Act, to certain purchases from unregistered suppliers under Section 9(4), and to specified supplies through e-commerce operators under Section 9(5). The aim is to collect tax efficiently from sectors that are hard to tax at source — such as individual transporters, advocates, and farmers — by shifting the obligation to the typically registered buyer.
Who has to pay GST under reverse charge?: The recipient of the supply pays it. For example, a company receiving services from its director, a business receiving legal services from an advocate, or a registered buyer purchasing raw cotton from an agriculturist all pay the GST directly to the government instead of the supplier collecting it. The recipient must be registered and discharge the liability; suppliers who deal only in reverse-charge supplies are often not required to register, since the buyer handles the tax.
Can I pay reverse charge GST using input tax credit?: No. Reverse-charge liability must be paid in cash, by depositing the amount in the electronic cash ledger — it cannot be set off against the balance in your electronic credit ledger. Once the reverse-charge tax has been paid, you can then claim input tax credit on it where the supply is otherwise eligible for credit. This pay-first, claim-later sequence is a common source of error, so it is worth building into your monthly filing routine.
Does reverse charge apply to purchases from unregistered suppliers?: It can, but only for notified classes of supplies under Section 9(4), not for every purchase from an unregistered dealer. The broad reverse charge on all unregistered purchases that existed briefly in the early GST period was suspended, and the current position applies Section 9(4) to specified cases — such as certain supplies to promoters in real estate. For the notified goods in this tool, like raw cotton or cashew, reverse charge applies when the supplier is an agriculturist or unregistered, and the registered buyer must self-invoice and pay.
Is sponsorship still under reverse charge?: This is exactly the kind of entry to verify, which is why the tool flags it. Sponsorship to a body corporate or partnership firm has long been a reverse-charge service at 18%, but guidance in 2025 indicates a shift in its treatment toward forward charge. Because the position has moved, you should confirm the current status against the latest CBIC notification before deciding who pays — the tool marks contested categories with a “Verify” badge rather than asserting a single answer that may be out of date.
What happens if I miss a reverse charge liability?: A missed reverse-charge payment typically surfaces as a mismatch in GSTR-2B and can lead to denial of the related input tax credit, interest on the unpaid tax, and scrutiny from the department. Because the liability is the recipient’s, the supplier not charging GST is not a defence. The practical safeguard is to review reverse-charge exposure each filing cycle — transporters, advocates, directors, security agencies, and notified goods are the usual triggers — and to self-invoice and pay promptly so the credit is not lost.