CORAA University · GST tool

Reverse Charge (RCM) Applicability Checker

Pick the inward supply from the complete notified list — Notification 13/2017-CT(R) for services, 4/2017-CT(R) for goods, plus the Section 9(4) promoter cases — answer the recipient-side questions, and get a verdict with the entry cite, self-invoicing duty and ITC note. Current through the January 2025 amendments.

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Notified entries (22)

Why this matters in audit

RCM liability hides in every expense head.

CORAA's AI working papers scan the expense ledgers for RCM-sensitive heads — freight, legal fees, director payments, rent, security — and flag unpaid reverse-charge liability with the notification entry, before the department does.

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How reverse charge applicability is determined

Under Section 9(3) of the CGST Act, the Government notifies specific categories of goods and services on which tax is payable by the RECIPIENT instead of the supplier. The service list lives in Notification 13/2017-Central Tax (Rate) and the goods list in Notification 4/2017-Central Tax (Rate) — both amended many times since 2017. The most recent significant changes: renting of commercial property by unregistered landlords to registered tenants and metal scrap from unregistered suppliers entered RCM from 10 October 2024 (Notfns 09/2024 and 06/2024-CT(R)), and from 16 January 2025 sponsorship by body corporates moved to forward charge while composition taxpayers were carved out of the commercial-rent entry (Notfn 07/2025-CT(R)).

Several entries turn on facts about the SUPPLIER or RECIPIENT, not just the service: GTA services escape RCM if the transporter has opted for forward charge (Annexure V — an option that now continues automatically year to year under Notfn 06/2023-CT(R)); residential-dwelling rent triggers RCM only when the tenant is registered; security services trigger RCM only when the agency is NOT a body corporate and the recipient is a normal registered person. This checker asks exactly those questions per entry.

Section 9(4) — reverse charge on purchases from unregistered suppliers generally — was defanged by the CGST (Amendment) Act 2018 and now applies only to notified classes: real-estate promoters, for the shortfall below 80% registered procurement, cement (any quantity) and capital goods (Notification 07/2019-CT(R)). Every RCM payment carries three duties: self-invoice under Section 31(3)(f) (within 30 days per Rule 47A from 1 November 2024), cash payment of the liability, and the offsetting ITC claim subject to Sections 16 and 17.

Worked example — office rent from an unregistered landlord

A GST-registered trading company (normal scheme) rents a godown for ₹1,00,000 per month from an individual landlord who is not registered under GST. Is GST payable, and by whom?

Inputs

SupplyRenting of immovable property other than residential dwelling

SupplierUnregistered individual landlord

RecipientRegistered person (normal scheme, not composition)

PeriodOn or after 10-10-2024

Output

VerdictRCM applies — Entry 5AB, Notfn 13/2017-CT(R) (ins. 09/2024)

Tax payable by tenant₹18,000/month (18% of ₹1,00,000) in cash

DocumentsSelf-invoice u/s 31(3)(f) within 30 days + payment voucher

ITC₹18,000 claimable, subject to s.16/17

Before 10 October 2024 this rent carried no GST at all, since the landlord was below threshold. Entry 5AB (inserted by Notification 09/2024-CT(R)) shifted the liability to the registered tenant. Had the tenant been a composition taxpayer, no RCM would apply for periods from 16 January 2025 (Notfn 07/2025-CT(R)) — but composition taxpayers cannot claim the ITC either, which is why the carve-out was made.

Common mistakes

Paying GTA RCM when the transporter opted for forward charge

A GTA that filed Annexure V charges 5% or 12% on its own invoice — and that option now continues automatically every year (Notfn 06/2023-CT(R)). Paying RCM on top of the GTA’s forward-charged invoice means double tax, and the RCM-side ITC can be questioned. Check the invoice and the GTA’s declaration before self-assessing.

Missing RCM on residential rent because the supply "looks exempt"

Renting a residential dwelling is exempt — to unregistered tenants. The moment a REGISTERED person (company guest house, employee flats, a registered firm’s premises) is the tenant, entry 5AA shifts 18% onto the tenant under RCM (w.e.f. 18-07-2022). The only escape is the proprietor-personal-use carve-out from 01-01-2023.

Ignoring the October 2024 additions — commercial rent and metal scrap

From 10-10-2024, commercial rent from an UNREGISTERED landlord to a registered tenant (entry 5AB) and metal scrap of Chapters 72–81 from unregistered suppliers (Notfn 06/2024-CT(R)) are under RCM. Businesses that never had RCM exposure before — any shop or office rented from a small landlord — acquired a monthly liability overnight.

Still paying (or provisioning) RCM on CIF ocean freight

The Supreme Court struck down the ocean-freight RCM in UOI v. Mohit Minerals (May 2022) and the entries were omitted from 01-10-2023. There is no current levy; amounts paid earlier may be refundable subject to limitation. Audit files that still carry this liability are overstated.

Setting off RCM liability against ITC

Reverse-charge tax must be paid in CASH through the electronic cash ledger — Section 49(4) restricts ITC utilisation to output tax, and RCM liability is not output tax in the credit-utilisation sense. Netting it against ITC in GSTR-3B invites interest u/s 50 on the full amount.

Frequently asked questions

What is reverse charge mechanism (RCM) under GST?+

Normally the supplier collects and pays GST. Under reverse charge — Section 9(3) and 9(4) of the CGST Act — the RECIPIENT pays the tax directly to the government. Section 9(3) covers notified goods (Notification 4/2017-CT(R)) and services (Notification 13/2017-CT(R)); Section 9(4) covers purchases from unregistered suppliers, but only for notified recipient classes — currently real-estate promoters.

Is RCM applicable on rent paid to an unregistered landlord?+

Yes, in two cases. Residential dwelling rented to a registered person: RCM under entry 5AA since 18-07-2022 (with a carve-out for proprietors renting for personal residence from 01-01-2023). Commercial/other property rented by an UNREGISTERED landlord to a registered person: RCM under entry 5AB since 10-10-2024 — with composition taxpayers excluded from 16-01-2025.

Is RCM applicable on purchases from unregistered dealers in 2025?+

Generally no. Section 9(4) applies only to notified classes since 01-02-2019 — currently only real-estate promoters (80% procurement shortfall, cement, capital goods per Notification 07/2019-CT(R)). But specific goods/services from unregistered suppliers ARE under Section 9(3) RCM — notably metal scrap (Ch 72–81) and commercial rent since October 2024, and essential oils since 2021.

Who pays GST on GTA services — and what is the forward charge option?+

By default the specified recipient (factory, registered person, body corporate, partnership etc.) pays 5% under RCM. A GTA may instead opt to charge GST itself — 5% without ITC or 12% with ITC — by filing Annexure V. Since FY 2024-25 the option continues automatically unless the GTA files Annexure VI to revert (Notification 06/2023-CT(R)).

Is a self-invoice mandatory for RCM purchases?+

Yes, when the supplier is unregistered — Section 31(3)(f) requires the recipient to issue a self-invoice, and Rule 47A (from 01-11-2024) fixes the time limit at 30 days from receipt of the supply. A payment voucher is also required on payment (s.31(3)(g)). The self-invoice is the document on which the RCM ITC is claimed (Rule 36(1)(b)).

Can I claim ITC of tax paid under RCM?+

Yes — tax paid under reverse charge is input tax by definition (s.2(62)) and is claimable in the same tax period, subject to the Section 16 conditions and the Section 17(5) blocked-credit list. The liability itself must be paid in cash; only after payment does the credit arise.

Is RCM payable on director remuneration?+

Salary to an executive/whole-time director under an employment contract is not a supply (Schedule III) — no GST. Fees to directors otherwise (sitting fees, commission, independent-director fees, guarantee fees) attract 18% RCM in the company’s hands under entry 6. Services a director renders in a personal capacity — like renting personally-owned property to the company — are NOT under entry 6 (Circular 201/13/2023-GST), though commercial rent from an unregistered director can now fall under entry 5AB.

Is ocean freight on imports still under RCM?+

No. The Supreme Court in UOI v. Mohit Minerals (19-05-2022) held the separate RCM levy on ocean freight in CIF imports unconstitutional — the import already suffers IGST on a value including freight. The enabling entries were omitted w.e.f. 01-10-2023. Courts have applied the ruling retrospectively, so earlier payments may be refundable subject to limitation.

Does RCM force me to register under GST?+

Yes — Section 24(iii) makes registration compulsory for persons required to pay tax under reverse charge, irrespective of the threshold. A business otherwise below ₹20/40 lakh turnover that receives even one notified RCM supply (say, advocate fees) must register.

Authoritative sources

Notification 13/2017-Central Tax (Rate) — RCM on services (as amended) — Notified under s.9(3) CGST Act; amended by 05/2022, 09/2024 and 07/2025-CT(R) among others.

Notification 4/2017-Central Tax (Rate) — RCM on goods (as amended) — Cashew, tendu, tobacco leaves, essential oils, silk yarn, raw cotton, lottery, government scrap, PSLC — and metal scrap from 10-10-2024 (06/2024-CT(R)).

Notification 07/2019-Central Tax (Rate) — s.9(4) for promoters — 80% shortfall, cement and capital goods received by promoters from unregistered suppliers.

Always confirm against the latest version of the source. Regulations evolve and amendments are common.

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Last reviewed: 2026-07-29 · For informational purposes only — not professional advice.