Reverse Charge Mechanism (RCM)

A rule where the buyer, not the seller, is liable to pay GST to the government on certain supplies.

Normally the supplier collects and pays GST. Under the Reverse Charge Mechanism, the responsibility shifts to the recipient of the goods or services, who must pay the tax directly to the government.

RCM applies to specified categories — for example certain notified goods/services and purchases from unregistered suppliers in some cases. The buyer can usually claim the tax paid under RCM as input tax credit, subject to conditions.

• Buyer pays GST instead of the supplier.
• Applies to notified supplies and some unregistered-supplier purchases.
• Must be self-invoiced and reported in returns.