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Published on 31 July 2025
Understanding Reverse Charge Mechanism (RCM) Under GST: A Comprehensive Guide
Reverse Charge Mechanism (RCM) under GST
Master Chart – Effective July 2025 (As per Notification No. 07/2025–Central Tax (Rate))
Under the Reverse Charge Mechanism (RCM), the obligation to pay GST shifts from the supplier to the recipient for notified supplies. This updated master chart consolidates current RCM provisions, including key entries, tax rates, SAC/HSN codes, applicable recipients, and major exemptions as of July 2025.
RCM on Services
| Type of Service | SAC Code | Tax Rate | Recipient | Exemption / Notes |
|---|---|---|---|---|
| Import of Services | Various | As per Notification 08/2017 | Any registered person | Applies to all imports; subject to Place of Supply provisions |
| Goods Transport Agency (GTA) (not opted for FCM) | 996511 | 5% | Registered recipients | Exempt for transport of agricultural produce, milk, salt, food grains, etc. GTA can opt for FCM at 12% |
| Passenger vehicle renting (with fuel) | 996601 | 5% | Body corporate | Supplier may opt for FCM @12%; ITC blocked unless seating capacity >13 |
| Legal services (individual advocates/law firms) | 9982 | 18% | Business entity | Exempt if recipient is not liable to register under GST |
| Government services (excluding rent, etc.) | Various | 18% | Business entity | Excludes postal, railway, aircraft, vessel leasing, etc. |
| Renting by govt./local authority | 997211/997212 | 18% | Registered person | Renting to Indian Railways exempt |
| Renting residential property to registered person | 997211 | 18% | Registered person | Exempt if used exclusively for residential/personal use |
| Security services (non-corporate provider) | 998525 | 18% | Registered person (excluding certain classes) | Not applicable to government TDS-only entities and composition taxpayers |
| Director’s services (not employee) | 9983 | 18% | Company/Body corporate | No RCM if services are under employment contract (Sec. 192 TDS) |
| Insurance agent to insurer | 9971 | 18% | Insurance company | RCM applies to commission income |
| Individual DSA to bank/NBFC | 997159 | 18% | Bank/NBFC | Applicable only for individuals/HUF/proprietors |
| Recovery agent services | 998599 | 18% | Bank/Financial Institution/NBFC | — |
| Sponsorship services | 998397 | 18% | Company/Partnership firm | Forward charge now applies if supplier is a body corporate |
| Arbitral tribunal services | 998215 | 18% | Business entity | — |
| Accommodation services via e-com operator | 996311 | 18% | E-commerce operator | Applicable only when supplier is unregistered |
| Restaurant services via e-com operator | 996331 | 5% | E-commerce operator | Applies only for unregistered restaurants |
| Renting of vehicle (non-corporate provider) | 996601 | 5% | Body corporate | See notes on FCM/ITC |
| Lending of securities | 997119 | 18% | Borrower | Under SEBI-registered schemes |
RCM on Goods
| Type of Goods | HSN Code | Tax Rate | Recipient | Exemption / Notes |
|---|---|---|---|---|
| Cashew nuts (raw) | 0801 | 5% | Registered person | Exempt if supplied by agriculturist |
| Tendu leaves | 14049010 | 18% | Registered person | Exempt from agriculturists |
| Tobacco leaves | 2401 | 5% | Registered person | Exempt when directly from growers |
| Raw cotton | 5201 | 5% | Registered person | Exempt when supplied by agriculturist |
| Silk yarn | 5004 / 5006 | 5% | Registered person | RCM applies only when manufacturer is the supplier |
| Lottery (State/UT/LA) | Various | 28% | Lottery distributor | Refer to CGST Notifications for specific handling |
| Used/seized goods/scrap from Govt/LA | Various | As per Notification 01/2017 | Registered person | Exempt if supplied by Indian Railways |
| Metal scrap from unregistered dealer | 72–81 series | 18% | Registered person | RCM applies on scrap purchases from unregistered sources |
| Essential oils (select types) | 3301 | 12–18% | Registered person | RCM only if unregistered supplier; per Notification 04/2019 |
| Priority sector lending certificates | — | 12% | Registered person | As notified |
| Cement (for RREP projects) | 2523 | 28% | Promoter | If procured from unregistered supplier |
| Any goods from unregistered supplier (RREP) | — | 18% | Promoter | Applies above 80% procurement threshold |
| TDR/FSI/long-term lease (RREP) | 9972 | 18% | Promoter | Applicable on unsold portion at time of OC/completion |
Recent Changes and Clarifications (July 2025)
- Sponsorship services by a body corporate now attract forward charge (not RCM).
- Composition taxpayers are exempt from RCM liability for renting services from unregistered providers.
- E-commerce operator (ECO) is liable under RCM only if the actual supplier is unregistered.
- Promoter-specific RCM on real estate purchases from unregistered vendors applies only to projects meeting RREP thresholds.
Key RCM Compliance Reminders
- GTA Services: Ensure eligibility for exemption (e.g., food grains, salt, organic manure).
- Legal Services: No RCM liability where the recipient is below the registration threshold.
- Security Services: Not applicable to government departments deducting TDS only or composition taxpayers.
- Residential Renting: RCM does not apply if rented for personal residential use (e.g., by sole proprietor for self).
- SEZ Units: Certain import-of-service RCM entries may be exempt if linked to authorized operations.
Conclusion
This RCM master chart (July 2025) offers a consolidated, practical reference for businesses, consultants, and GST practitioners. It reflects the most up-to-date rules including applicable tax rates, recipient responsibilities, SAC/HSN codes, and exemptions.
For accurate compliance:
- Review supplier registration status,
- Track sector-specific notifications,
- Reconcile RCM liabilities monthly,
- Maintain supporting documentation (e.g., RCM tax payment proofs via GSTR-3B).