Which services are covered under RCM Section 9(3)?

Key services under RCM per Section 9(3) of the CGST Act include: (1) Legal services from individual advocate or firm of advocates to any business entity, (2) GTA (Goods Transport Agency) services unless GTA has opted for forward charge, (3) Sponsorship services to body corporate/firm, (4) Insurance agent commission, (5) Recovery agent services to banks/NBFCs, (6) Directors' fees from individual director to company, (7) Renting of motor vehicle (non-corporate to corporate), (8) Security services from individual/proprietor to registered person. The GST rate varies by service — typically 5% for GTA and motor vehicle renting, 18% for most others.

How do I report RCM in GSTR-3B and GSTR-1?

In GSTR-3B: Report RCM liability in Table 3.1(d) under 'Inward supplies liable to reverse charge'. Claim ITC of RCM paid in Table 4(A)(2) under 'Inward supplies liable to reverse charge (other than import of goods)'. In GSTR-1: Report in Table 4B for inter-state RCM supplies or Table 4C for intra-state RCM supplies. You must also generate a self-invoice under Rule 46(b) of CGST Rules within 30 days of receiving the service. The time of supply for RCM is the date of payment or the 61st day from invoice date, whichever is earlier (Section 13(3)).

GST Reverse Charge (RCM) Calculator India — Section 9(3) FY 2025-26

Q: What is Reverse Charge Mechanism (RCM) under GST?

Under Reverse Charge Mechanism (RCM), the recipient of goods or services pays GST instead of the supplier. Section 9(3) of the CGST Act notifies specific services where RCM applies: legal services from advocates, GTA freight, sponsorship, insurance agent commission, recovery agent services, directors' fees, renting of motor vehicles, and security services from individuals to corporates. The recipient must pay RCM tax using the electronic cash ledger (not ITC) and can claim ITC of the RCM paid if the service is for business use.

Q: Can I use ITC balance to pay RCM liability?

No. RCM liability MUST be paid using the electronic cash ledger only. You cannot use your Input Tax Credit (ITC) balance to discharge RCM tax. This is one of the most common mistakes in GST compliance. After paying RCM in cash, you can claim ITC of the RCM amount paid (if the service is used for business purposes) in the same month's GSTR-3B under Table 4(A)(2). The net financial impact is a cash flow timing difference — you pay cash upfront and recover it as ITC.

Calculate reverse charge GST liability for services under Section 9(3) CGST Act. Check RCM applicability for legal services, GTA freight, directors' fees, security services, and more. See CGST/SGST split, ITC claimable, compliance checklist with GSTR-3B/GSTR-1 reporting, self-invoice requirements, and time of supply rules. Updated for FY 2025-26.

Calculate RCM GST payable, ITC claimable, and net cash flow impact

Service type (under RCM)

Services notified under Section 9(3) of CGST Act where recipient pays GST

Invoice value (excl. GST)

₹

Value of service received from supplier (before GST)

GST rate

Applicable GST rate for the service. Auto-set based on service type.

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How to Use This Calculator

RCM Calculator tab

Select the service type from the dropdown (legal services, GTA freight, directors' fees, etc.). Enter the invoice value (excluding GST). The calculator auto-selects the applicable GST rate, but you can override it. See the RCM GST payable (CGST + SGST split), ITC claimable, and net cash flow impact.

Am I Liable for RCM? tab

Select the service received, whether the supplier is GST-registered, the supplier type (individual/firm/company), and your entity type. The decision engine evaluates Section 9(3) and 9(4) rules and shows a clear YES/NO answer with legal reasoning.

RCM Compliance tab

Enter the RCM amount paid and your filing frequency (monthly/quarterly). Get a step-by-step compliance checklist: self-invoice generation, cash ledger payment, GSTR-3B table references, GSTR-1 reporting, time of supply rules, and ITC claim procedure.

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The Formula

Under Reverse Charge Mechanism (RCM), the recipient pays GST instead of the supplier. The tax is calculated on the invoice value and must be paid via the electronic cash ledger.

RCM Tax Calculation:
RCM GST = Invoice Value × GST Rate
CGST = RCM GST / 2
SGST/UTGST = RCM GST / 2
(For inter-state: IGST = RCM GST)

Cash Flow Impact:
Cash outflow = RCM GST (paid via electronic cash ledger)
ITC credit = RCM GST (if for business use)
Net cost = ₹0 (cash flow timing impact only)

Time of Supply (Section 13(3)):
Time of supply = Earlier of:
• Date of payment to supplier
• 61st day from date of invoice
• Date of entry in books of accounts (if neither above applies)

The recipient pays RCM tax in cash only (electronic cash ledger). After paying, the recipient can claim ITC of the RCM paid in the same month's GSTR-3B if the service is for business use. The net financial impact is zero — it's purely a cash flow timing difference.

Example

Rajesh — IT company paying legal fees to an advocate

Rajesh's company (Pvt Ltd) receives legal services from Advocate Priya Sharma for a contract dispute. Invoice value: ₹1,00,000. GST at 18% applies under RCM.

Step 1: Calculate RCM GST

Invoice value₹1,00,000

GST rate18%

RCM GST payable₹18,000

CGST (9%)₹9,000

SGST (9%)₹9,000

Step 2: Payment & ITC

Pay to advocate₹1,00,000 (invoice amount)

Pay RCM via cash ledger₹18,000 (CGST ₹9,000 + SGST ₹9,000)

Total cash outflow₹1,18,000

Step 3: Claim ITC

ITC claimable (business use)₹18,000

Claim in GSTR-3B Table4(A)(2)

Net cost after ITC₹1,00,000 (same as invoice)

Step 4: Compliance

Self-invoiceMandatory — generate under Rule 46(b)

GSTR-3B Table 3.1(d)Report ₹18,000 RCM liability

GSTR-3B Table 4(A)(2)Claim ₹18,000 ITC

GSTR-1Table 4B (inter-state) or 4C (intra-state)

Rajesh pays ₹18,000 RCM tax in cash, claims the same as ITC, and the net cost remains ₹1,00,000. The impact is cash flow timing only — he needs ₹18,000 extra in his cash ledger at the time of GSTR-3B filing.

RCM Services — Section 9(3) CGST Act

▶ Complete RCM Services List (Section 9(3))

Service	Supplier	Recipient	GST Rate
Legal services	Individual advocate / firm of advocates	Any business entity	18%
GTA freight	Goods Transport Agency (if not opted for forward charge)	Factory, society, co-op, partnership, body corporate, casual taxable person	5%
Sponsorship	Any person	Body corporate / partnership firm	18%
Insurance agent	Insurance agent	Insurance company	18%
Recovery agent	Recovery agent	Banking company / financial institution / NBFC	18%
Directors' fees	Director (individual capacity, not employee)	Company / body corporate	18%
Renting motor vehicle	Individual / proprietor / partnership (cost of fuel included)	Body corporate	5%
Security services	Individual / proprietor / HUF	Any registered person	18%

Note: GTA rate is 5% under RCM (without ITC for GTA). If GTA opts for forward charge, rates are 5% (without ITC) or 12% (with ITC), and RCM does not apply.

▶ Section 9(4) — Purchase from Unregistered Dealer

Section 9(4) required registered persons to pay GST under reverse charge on ALL purchases from unregistered dealers. However, this was suspended from 13 October 2017 via Notification 38/2017.

As of FY 2025-26, Section 9(4) general applicability remains suspended. It has been partially restored only for specific categories:

Cement: purchased from unregistered supplier by a promoter of a RERA-registered project
Sand, bricks: from unregistered supplier to RERA promoter
Other construction materials for RERA projects in specific cases

For most regular businesses, Section 9(4) RCM does NOT apply on general purchases from unregistered dealers.

▶ RCM Payment Rules — Cash Ledger Only

Mandatory cash payment: RCM liability MUST be discharged using the electronic cash ledger. You cannot use ITC balance to pay RCM. This rule is non-negotiable.

ITC on RCM: After paying RCM in cash, you can claim ITC of the RCM amount in the same GSTR-3B return period under Table 4(A)(2), provided:

The service is used for business (furtherance of business)
You have generated a self-invoice under Rule 46(b)
The service is not a blocked credit under Section 17(5)

Net effect: For most businesses, RCM is cash-flow neutral. You pay ₹X in cash and get ₹X back as ITC. The impact is the timing of cash flow — you need extra cash at GSTR-3B filing time.

▶ Self-Invoice Requirements (Rule 46(b))

For every RCM transaction, the recipient must generate a self-invoice containing:

Your GSTIN and legal name
Consecutive serial number (unique for the financial year)
Date of issue (within 30 days of receipt of service)
Name, address of the supplier (even if unregistered)
HSN/SAC code of the service
Description and value of the service
Tax rate and tax amount (CGST + SGST or IGST)
Place of supply

Record retention: Keep self-invoices for at least 72 months (6 years) per Section 36 read with Rule 56 of CGST Rules.

FAQ

What is Reverse Charge Mechanism (RCM) under GST? ▼

Under Reverse Charge Mechanism (RCM), the recipient of goods or services pays GST instead of the supplier. Normally, the supplier charges and remits GST. Under RCM, the liability shifts to the recipient. Section 9(3) of the CGST Act lists specific services where RCM mandatorily applies: legal services from advocates, GTA freight, sponsorship, insurance agent commission, recovery agent services, directors' fees, renting of motor vehicles (non-corporate to corporate), and security services (individual/proprietor to registered person). The recipient must pay RCM tax using the electronic cash ledger (not ITC), generate a self-invoice, and report in GSTR-3B. ITC of RCM paid is claimable if the service is for business use.

Can I use my ITC balance to pay RCM tax liability? ▼

No. This is the most critical rule of RCM compliance. RCM liability MUST be paid using the electronic cash ledger only. You cannot offset RCM against your existing ITC balance. This means you need sufficient cash deposited in your GST cash ledger before filing GSTR-3B. After paying RCM in cash, you can claim ITC of the RCM amount paid (if for business use) in the same month's GSTR-3B under Table 4(A)(2). So the net financial impact is zero — but you need the upfront cash. Failure to pay RCM in cash attracts interest at 18% p.a. under Section 50(1).

Is Section 9(4) RCM on purchases from unregistered dealers still applicable? ▼

Section 9(4) general RCM on purchases from unregistered dealers was suspended from 13 October 2017 via Notification 38/2017 (Central Tax Rate). It has NOT been fully restored. As of FY 2025-26, it applies only to specific categories: purchase of cement, sand, and bricks from unregistered suppliers by promoters of RERA-registered real estate projects. For most regular businesses, Section 9(4) RCM does not apply on general purchases from unregistered dealers. This is a common area of confusion — many businesses incorrectly believe they need to pay RCM on all purchases from unregistered dealers.

What is the time of supply for services under RCM? ▼

Under Section 13(3) of the CGST Act, the time of supply for services under reverse charge is the earliest of: (a) the date of payment as entered in the books of the recipient, (b) the date immediately following 60 days from the date of issue of invoice by the supplier (i.e., the 61st day). If payment is made within 60 days, the time of supply is the date of payment. If payment is NOT made within 60 days, the time of supply is the 61st day from the invoice date — meaning you must account for RCM even if you haven't paid the supplier yet. This is critical for correct GSTR-3B period reporting.

Do I need to generate a self-invoice for RCM? ▼

Yes, mandatory. Under Rule 46(b) of the CGST Rules, the recipient must issue a self-invoice (also called a payment voucher for services from unregistered suppliers) for every RCM transaction. The self-invoice must contain: your GSTIN, consecutive serial number, date, supplier details (name, address), HSN/SAC code, description and value of service, tax rate and amount (CGST + SGST or IGST), and place of supply. It must be issued within 30 days of receipt of service. Without a valid self-invoice, your ITC claim on RCM may be questioned during audit. Keep all self-invoices for at least 72 months (6 years) as per Section 36 read with Rule 56.

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