GST applies on everyone. One must note levy of GST differ from person to person. There are two ways of levying GST. One is a Forward Charge Mechanism (FCM) or Normal Charge Mechanism in which supplier of goods and supplier of services is responsible for charging GST and paying to Government. Whereas the other one is Reverse Charge Mechanism (RCM) under GST in which recipient is liable for paying GST directly to Government.
Reverse charge mechanism or RCM under GST is a mechanism where the tax liability is borne by the recipient of the goods and services instead of the supplier. In other words, the supplier is not liable to charge and pay the GST to Government but the recipient becomes responsible for paying the GST directly to government. The RCM under GST applies under certain conditions and only on specified goods and services. If any Person fails to Pay GST under RCM, then it will attract GST Interest liability as well.
Those taxpayers who are required to pay GST under Reverse Charge, they are mandatorily required to take GST Registration. Also, they must maintain required accurate records of all RCM transactions. They must also file monthly returns and pay GST on time. If any person fails to maintain the books, then they might encounter penalties and legal action.
RCM on Supply of Goods
Following is the Updated list of notified Goods under Reverse Charge Mechanism
| S.No. | Supply of Goods | Supplier of Goods | Recipient of Goods |
| 1 | Cashew nuts (not shelled or peeled) | Agriculturist | Registered person |
| 2 | Bidi Wrapper Leaves (tendu), Tobacco Leaves | Agriculturist | Registered person |
| 3 | Silk Yarn | Manufacturer of silk yarn from raw silk or silk worm cocoons | Registered person |
| 4 | Lottery | State Government, Union Territory or local authority | Lottery distributor or selling agent |
| 5 | Raw Cotton | Agriculturist | Registered person |
| 6 | Used vehicles, seized and confiscated goods, old and used goods, waste and scrap | Central Government, State Government, Union Territory or local authority | Registered person |
| 7 | Purchase of priority sector lending certificate | Registered person | Registered person |
| 8 | Essential oils of peppermint (Mentha piperita), Spearmint oil (ex-mentha spicata), Water mint-oil (ex-mentha aquatic), Horsemint oil (ex-mentha sylvestries), Bergament oil (ex-mentha citrate), Mentha arvensis, other than those of citrus fruit. | Unregistered person | Registered person |
RCM on Supply of Services
Following is the updated notified list of services under Reverse Charge Mechanism
| S. No. | Supply of Services | Supplier | Recipient |
| 1 | Insurance Agent Services | An insurance agent | Person carrying on insurance business |
| 2 | Legal services, directly or indirectly | An individual advocate including a senior advocate or firm of advocates | Any business entity |
| 3 | Arbitral Services | An Arbitral Tribunal | Any business entity |
| 4 | Sponsorship Services | Any person | Any body corporate or partnership firm |
| 5 | Reserve Bank Services | Members of Overseeing Committee | Reserve Bank of India |
| 6 | Government Services, excluding: (i) Department of Posts (ii) in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport (iii) transport of goods or passengers (iv) renting of immovable property |
Central Government, State Government, Union territory or Local authority | Any business entity |
| 7 | Renting of residential dwelling | Any person | Registered Person |
| 8 | Services of development rights or Floor Space Index (FSI) or Long term lease of land (30 years or more) for construction of a project | Any person | Promoter |
| 9 | DSA (Direct Selling Agent) Service | Individual DSAs except a body corporate, partnership/ LLP firm | Bank or NBFCs |
| 10 | Recovery services | Recovery Agent | Bank, NBFCs or financial institution |
| 11 | Government Services | Central Government, State Government, Union territory or Local authority | Any business entity |
| 12 | Business Facilitator | Business facilitator | Bank |
| 13 | Copyright service | Authors, Music composer, photographer, artist, etc | Music company, producer etc |
| 14 | Security Services | Security Personnel | Registered person |
| 15 | Services provided by business facilitator (BF) | Business facilitator (BF) | Bank |
| 16 | Services provided by an agent of business correspondent (BC) to business correspondent (BC) | Agent of business correspondent (BC) | Business correspondent |
| 17 | Security services, except by: | Any person other than a body corporate | Registered person |
| (a) Central, state or UT Department or Establishment | |||
| (b) local authority | |||
| (c) Governmental agencies which has taken registration only for the purpose of deducting TDS and not for making a taxable supply | |||
| (d) Composition Taxpayer | |||
| 18 | Services provided by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the recipient | Any person, other than a body corporate and does not issue an invoice charging GST @12% | Body Corporate |
| 19 | Services of lending of securities under Securities Lending Scheme, 1997 of SEBI | Lender under the Scheme of SEBI | Borrower |
| 20 | Services of transportation of goods by road except by: (a) Central, state or UT Department or Establishment (b) local authority (c) Governmental agencies which has taken registration only for the purpose of deducting TDS and not for making a taxable supply |
Goods Transport Agency not opting to pay GST under Forward Charge Mechanism | (a) Factory registered (b) Society registered (c) Co-operative society (d) Registered person (e) any body corporate (f) Partnership firm including AOP (g) Casual taxable person |
| 21 | Services by any person who is located in a non-taxable territory | Any person located in a non-taxable territory | Any person located in the taxable territory other than non-taxable online recipient |
| 22 | Services by way of transpiration of goods by vessel from a place outside India up to the customs station of clearance in India | A person located in non-taxable territory | Importer |
Simran Sahni is a Digital Marketer by profession and a baker at heart. She holds over 6 years of experience in SEO and has worked with big brands, consistently improving their SEO performance. She has collaborated closely with various agencies and personal brands to gain a deep understanding of what strategies work best in different niches.
