All about RCM in GST

Posted by CA Pankaj Kumar Vats
On 11 Nov 2019

So the very first question rises – What is RCM. The full form of RCM is “Reverse Charge Mechanism”

In actual – it is exactly the reverse of a normal sale transaction. In RCM, GST is paid by the buyer himself, directly to the Government.

This can be understood with the help of the following example:-

Normal Transaction in GST:

Mr. X buys, “Service 1” from Mr. Y
Here Mr. X is buyer
And Mr. Y is seller
Billing details of Service 1
Service 1 : 1,000.00
GST @ 12% : 120.00
Total : 1,120.00
Mr. X makes payment for Rs. 1,120.00 to Mr. Y


RCM Transaction in GST:

Mr. X buys, “Service 1” from Mr. Y
Here Mr. X is buyer
And Mr. Y is seller
Billing details of Service 1
Service 1 : 1,000.00
GST @ 12% : RCM—————-buyer need to pay GST directly to Govt
Total : 1,000.00
Mr. X makes payment for Rs. 1,000.00 to Mr. Y
And Mr. X makes payment to the Govt towards GST @12% : 120.00
Total Payment by Mr. X is 1,120.00


List of Services on which GST is payable on RCM basis

  1. GTA Service ………..Service of Transport Agency……………..(Person liable to pay tax in RCM –
    Any Registered Person availing services)
  2. Legal Services………… (Person liable to pay tax in RCM – Any Registered Person availing
    services)
  3. Government Services……… Service Provided by any Govt to any Business Entity, excluding
    speed post, Insurance, aircraft, vessel, transport of goods or
    passengers………………………………….. (Person liable to pay tax in RCM – Any Registered
    Person availing services)
  4. Services by Director……………………………… (Person liable to pay tax in RCM – Company
    availing services)
  5. Insurance Agent…………………… (Person liable to pay tax in RCM – Insurance Company)
  6. Recovery Agent……………… (Person liable to pay tax in RCM – Banking Company / Financial
    Institution)
  7. Copyright services……………… (Person liable to pay tax in RCM – Publisher/ Music Company /
    Producer)
  8. Services by DSA…………… (Person liable to pay tax in RCM – Banking Company / NBFC)
  9. Security Services……………………. (Person liable to pay tax in RCM – Any registered Person)
  10. Renting of Motor Vehical – ………….Body Corporate all liable for RCM……………..
  11. Transportation of passenger by a radio cab or tax – ————(Person liable to pay tax in RCM
    – E-commerce operator) …………e.g. Ola / Uber
  12. Accommodation in hotel, inn and guest house -……………..———————(Person liable to
    pay tax in RCM – E-commerce operator) …………e.g. Oyo / makemytrip
  13. Services by way of housekeeping, plumbing etc —————————(Person liable to pay tax
    in RCM – E-commerce operator) …………e.g. Urban Clap
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