{"id":602,"date":"2024-08-28T17:55:38","date_gmt":"2024-08-28T12:25:38","guid":{"rendered":"https:\/\/www.caclubindia.com\/guide\/?p=602"},"modified":"2025-07-01T12:29:01","modified_gmt":"2025-07-01T06:59:01","slug":"reverse-charge-mechanism","status":"publish","type":"post","link":"https:\/\/www.caclubindia.com\/guide\/reverse-charge-mechanism\/","title":{"rendered":"Reverse Charge Mechanism: New Statement for Accurate Filing"},"content":{"rendered":"\n<p>Reverse Charge Mechanism means the liability to pay tax is on the recipient (Purchaser) of supply of goods or services instead of the supplier of such goods or services.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\r\n<div class=\"ez-toc-title-container\">\r\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\r\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\r\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caclubindia.com\/guide\/reverse-charge-mechanism\/#Purpose_of_the_new_%E2%80%9CRCM_LiabilityITC_Statement%E2%80%9D_on_the_GST_Portal\" >Purpose of the new &#8220;RCM Liability\/ITC Statement&#8221; on the GST Portal<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caclubindia.com\/guide\/reverse-charge-mechanism\/#Types_of_Reverse_Charge_Mechanism\" >Types of Reverse Charge Mechanism<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caclubindia.com\/guide\/reverse-charge-mechanism\/#1_On_the_nature_of_supply_or_supplier\" >1. On the nature of supply or supplier<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caclubindia.com\/guide\/reverse-charge-mechanism\/#Notified_goods_or_services_for_RCM\" >Notified goods or services for RCM<\/a><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caclubindia.com\/guide\/reverse-charge-mechanism\/#Notified_Goods_Under_Reverse_Charge\" >Notified Goods Under Reverse Charge<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caclubindia.com\/guide\/reverse-charge-mechanism\/#Notified_Services_Under_Reverse_Charge\" >Notified Services Under Reverse Charge<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caclubindia.com\/guide\/reverse-charge-mechanism\/#2_Taxable_supplies_by_any_unregistered_person_to_a_registered_person\" >2. Taxable supplies by any unregistered person to a registered person<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caclubindia.com\/guide\/reverse-charge-mechanism\/#Provision_for_Reverse_Charge_Mechanism_Under_GST\" >Provision for Reverse Charge Mechanism Under GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.caclubindia.com\/guide\/reverse-charge-mechanism\/#Non_eligibility_for_composition_scheme\" >Non eligibility for composition scheme.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.caclubindia.com\/guide\/reverse-charge-mechanism\/#Time_of_Supply\" >Time of Supply<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.caclubindia.com\/guide\/reverse-charge-mechanism\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\r\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Purpose_of_the_new_%E2%80%9CRCM_LiabilityITC_Statement%E2%80%9D_on_the_GST_Portal\"><\/span>Purpose of the new &#8220;RCM Liability\/ITC Statement&#8221; on the GST Portal<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A new statement &#8220;RCM Liability\/ITC Statement&#8221; has been introduced on the GST Portal to help taxpayers accurately report RCM transactions.<\/p>\n\n\n\n<p>It matches the RCM liability in GSTR-3B with the claimed ITC for a given return period.<\/p>\n\n\n\n<p>This statement is effective from August 2024 for monthly filers and the July-September 2024 quarter for quarterly filers.<\/p>\n\n\n\n<p>To access it, go to: Services &gt;&gt; Ledger &gt;&gt; RCM Liability\/ITC Statement.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"684\" src=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/08\/RCM-Statement-1024x684.png\" alt=\"\" class=\"wp-image-603\" srcset=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/08\/RCM-Statement-1024x684.png 1024w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/08\/RCM-Statement-300x201.png 300w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/08\/RCM-Statement-768x513.png 768w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/08\/RCM-Statement.png 1128w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_Reverse_Charge_Mechanism\"><\/span>Types of Reverse Charge Mechanism<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are two types of Reverse Charge scenarios provided in law:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_On_the_nature_of_supply_or_supplier\"><\/span>1. On the nature of supply or supplier<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Notified_goods_or_services_for_RCM\"><\/span>Notified goods or services for RCM<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>As per the provision of section Sec 9(3) of CGST\/SGST (UTGST) Act 2017 and Sec 5(3) of IGST Act 2017,<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>the Government may, on the recommendation of the Council, by notification ,<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>specify categories of supply of goods or services or both,<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>the tax on which shall be paid on reverse charge basis by the recipient of such goods or services.<\/li>\n<\/ul>\n\n\n\n<h5 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Notified_Goods_Under_Reverse_Charge\"><\/span>Notified Goods Under Reverse Charge<span class=\"ez-toc-section-end\"><\/span><\/h5>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Goods<\/strong><\/td><td><strong>Supplier<\/strong><\/td><td><strong>Taxable Person<\/strong><\/td><\/tr><tr><td>Cashew nuts, not shelled or peeled<\/td><td>Agriculturist<\/td><td>Any registered person<\/td><\/tr><tr><td>Bidi wrapper leaves<\/td><td>Agriculturist<\/td><td>Any registered person<\/td><\/tr><tr><td>Tobacco leaves <\/td><td>Agriculturist<\/td><td>Any registered person<\/td><\/tr><tr><td>Silk yarn<\/td><td>Any person who manufactures silk yarn from raw silk or silk worm cocoons for supply of silk yarn<\/td><td>Any registered person<\/td><\/tr><tr><td>Supply of lottery<\/td><td>State Government, Union Territory or any local authority<\/td><td>Lottery distributor or selling agent<\/td><\/tr><tr><td>Cement<\/td><td>An unregistered supplier<\/td><td>Promoter\/Builder<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h5 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Notified_Services_Under_Reverse_Charge\"><\/span>Notified Services Under Reverse Charge<span class=\"ez-toc-section-end\"><\/span><\/h5>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Services<\/strong><\/td><td><strong>Supplier<\/strong><\/td><td><strong>Taxable Person<\/strong><\/td><\/tr><tr><td>Transport of Goods by Road<\/td><td>Goods Transport Agency<\/td><td>Registered Person<\/td><\/tr><tr><td>Legal Service<\/td><td>Legal Firm\/advocate<\/td><td>Registered Person<\/td><\/tr><tr><td>Sponsorship Services<\/td><td>Individual \/ Business<\/td><td>Corporate or Partnership Firms<\/td><\/tr><tr><td>Services of an Insurance Agent<\/td><td>Insurance Agent<\/td><td>Insurance Company<\/td><\/tr><tr><td>Recovery Agent Services<\/td><td>Recovery Agent<\/td><td>Banking Company<\/td><\/tr><tr><td>Taxi services through an e-commerce operator<\/td><td>Tax Driver<\/td><td>E-Commerce Operator<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Note : <\/strong>The person who pays GST on reverse charge is recipient of supply (should be registered taxpayers).<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Taxable_supplies_by_any_unregistered_person_to_a_registered_person\"><\/span>2. Taxable supplies by any unregistered person to a registered person<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In case of an unregistered person is selling goods or providing any services to the registered person,<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>then the liability to pay tax shifts on the registered person i.e., the recipient of goods or services,<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>where such supply is of taxable supplies.<\/li>\n<\/ul>\n\n\n\n<p>No reverse charge mechanism in case of exempted supplies.<\/p>\n\n\n\n<p>Government has given an exemption of Rs 5000 per day.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Provision_for_Reverse_Charge_Mechanism_Under_GST\"><\/span>Provision for Reverse Charge Mechanism Under GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The recipient of goods or services must be registered under GST irrespective of threshold limit.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Non_eligibility_for_composition_scheme\"><\/span>Non eligibility for composition scheme.<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Supplies under RCM are not included in aggregate turnover of the assessee.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>ITC on RCM tax amount can be claimed only by recipients of goods or services if they are used to conduct business or will be used for business purposes.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>RCM tax can be paid in cash only through electronic cash ledger not by initializing ITC i.e., through electronic credit ledger.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Whenever reverse charge applies, the supplies must clearly mention on the invoice that the tax payable through reverse charge mechanism.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Person liable under <strong><a href=\"https:\/\/www.caclubindia.com\/articles\/reverse-charge-mechanism-vs-forward-charge-mechanism-51048.asp\">RCM<\/a><\/strong> must issue a tax invoice by mentioning the supply is received under RCM.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Time_of_Supply\"><\/span>Time of Supply<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The time of supply under RCM shall be the earliest of the following dates:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>the date of receipt of goods or date of payment<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>the date immediately following 30 days in case of goods and 60 days in case of services from the date of issue of invoice.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1724847294435\"><strong class=\"schema-faq-question\">What happens if RCM is not paid?<\/strong> <p class=\"schema-faq-answer\">The recipient cannot claim ITC for the unpaid tax which can lead to higher tax liability.<br\/>Interest at 18% p.a will be charged from the due date until payment is made.<br\/>Non-payment can also result in penalties up to 100% of the due tax under the GST Act.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1724847309728\"><strong class=\"schema-faq-question\">Who will issue invoice under RCM?<\/strong> <p class=\"schema-faq-answer\">The taxpayer who is liable to pay tax under RCM must issue an invoice for the goods or services received, stating that the tax is paid under RCM.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1724847780994\"><strong class=\"schema-faq-question\">What should a taxpayer do if there&#8217;s a discrepancy between the RCM liability and the ITC claimed in the statement?<\/strong> <p class=\"schema-faq-answer\">If discrepancy found, the taxpayer must review and correct their GSTR-3B filing, ensuring that both the RCM liability and ITC claimed are accurately reported.<br\/><\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>Reverse Charge Mechanism means the liability to pay tax is on the recipient (Purchaser) of supply of goods or services [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":605,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center 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center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[6],"tags":[],"class_list":["post-602","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-gst"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\r\n<title>Reverse Charge Mechanism: New Statement for Accurate Filing - Tax Guide<\/title>\r\n<meta name=\"description\" content=\"Reverse charge mechanism reporting made easy now check what is the purpose of the new RCM Liability or ITC Statement on the GST Portal?\" \/>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.caclubindia.com\/guide\/reverse-charge-mechanism\/\" \/>\r\n<meta 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