Reverse Charge (RCM) in GST — Buyer vs Seller Responsibilities + GSTR-1 & 3B Reporting

Reverse Charge (RCM) in GST — What the Buyer must do vs What the Seller must do

Clear steps, invoices/docs, and the exact boxes in GSTR-1 and GSTR-3B for both sides.

You are the Buyer / Recipient (RCM applies)

• Pay GST to Govt in cash (not to supplier) via GSTR-3B → Table 3.1(d).
• After paying, claim ITC (subject to eligibility) in GSTR-3B → Table 4A(3) (all other ITC).
• If supplier is unregistered (or where rules require), raise Self-Invoice & Payment Voucher.
• Ensure vendor invoice mentions “Tax payable under Reverse Charge”.

You are the Seller / Service Provider (not liable to pay tax)

• Issue invoice without charging GST and clearly add “Tax payable under RCM”.
• GSTR-1: report the invoice in Table 4B (B2B — supplies attracting RCM) with RCM flag.
• GSTR-3B: Your tax doesn’t arise on these invoices; value may auto-flow to 3.1(a) but tax stays nil.
• Follow e-invoicing rules (if applicable) and keep support docs.

Where exactly to put values — Buyer vs Seller

Return	Buyer / Recipient (RCM payer)	Seller / Service Provider
GSTR-1 (outward)	Not applicable (no outward supply). Note: If you raised self-invoice for unregistered supplier, that’s your purchase doc — it does not go in GSTR-1.	Report each RCM invoice in Table 4B (B2B supplies attracting reverse charge). Tick the RCM field on that invoice line.
GSTR-3B (summary & payment)	Pay RCM tax in cash: put taxable value & tax in Table 3.1(d) “Inward supplies liable to reverse charge”. Then claim eligible ITC of the same in Table 4A(3).	Do not pay tax on RCM invoices. If your system auto-fills value in 3.1(a), tax impact stays nil because RCM flag is set in GSTR-1.

Walkthroughs (₹ amounts)

Example A — Legal services (RCM @ 18%)

• Seller (Advocate) issues invoice for fees ₹1,00,000 with the note “Tax payable under Reverse Charge”. No GST charged on invoice. In GSTR-1 → Table 4B, mark RCM and capture the rate.
• Buyer (Company) pays ₹1,00,000 to advocate, and pays ₹18,000 GST to Govt via GSTR-3B → 3.1(d) (cash). Then claims ₹18,000 ITC in 4A(3) (if eligible).

Example B — Director services to a company (RCM)

• Seller (Director) issues invoice without GST; mentions RCM. Reports the invoice in GSTR-1 → 4B with RCM flag.
• Buyer (Company) pays GST under RCM in 3.1(d) and takes ITC in 4A(3) if eligible.

Example C — GTA freight (RCM in specified cases)

• Seller (GTA) issues consignment note; if RCM applies, shows RCM on the document and reports in GSTR-1 → 4B.
• Buyer/Consignee pays RCM tax in 3.1(d) and (if eligible) claims ITC in 4A(3).

Invoice & documentation checklist

• Seller’s tax invoice must state: “tax payable on reverse charge” (Rule 46). If e-invoicing applies, ensure the RCM field is set.
• Buyer: raise self-invoice & payment voucher where required (e.g., unregistered supplier), and keep proof of RCM tax payment.
• Books (buyer): Expense Dr / RCM Payable Cr → on payment: RCM Payable Dr / Cash Cr → on ITC: ITC Dr / Output GST (set-off) or adjust per policy.

Avoid these mistakes

• Buyer trying to pay RCM using ITC (not allowed; must be cash first).
• Seller forgetting to flag RCM in GSTR-1 → 4B or to print the RCM note on the invoice.
• Buyer claiming ITC without paying RCM first in 3.1(d).
• Using wrong GST rate for the notified category; always check latest notifications.

Disclaimer: Examples use rounded rates/amounts and popular RCM cases (legal, director, GTA). Always check the latest notification for your category and rate.