income tax
Published on 21 July 2025
Understanding Reverse Charge Mechanism under GST: A Complete Guide
RCM under GST – 2025 Edition: Practical Master Chart for Business Owners and Finance Heads
If you're running a business or handling compliance, the Reverse Charge Mechanism (RCM) under GST isn’t something you can afford to overlook—especially after the 2025 updates. Whether you're dealing with goods from agriculturists or renting office space from an unregistered landlord, these rules decide who pays the tax, how much, and when.
To help you stay ahead, here’s a thoroughly updated breakdown of RCM rates, key SAC/HSN codes, exemptions, and the latest October 2024 amendments—presented in a way that's clear, hands-on, and practical for real-world compliance.
1. RCM Master Table (2025) – At a Glance
A. RCM on Services
| S. No. | SAC Code | Nature of Service | Supplier (RCM basis) | Who Pays (Recipient) | GST Rate |
|---|---|---|---|---|---|
| 1 | 996511 | GTA (road transport) | Goods Transport Agency (not under FCM) | Any registered business | 5% |
| 2 | 997211/12 | Renting of immovable property | Unregistered owner | Registered tenant | 18% |
| 3 | 9982 | Legal services | Advocate / Law firm | Business entity | 18% |
| 4 | 9983 | Director services | Individual director | Company or body corporate | 18% |
| 5 | 9971 | Insurance agent | Agent (individual) | Insurance company | 18% |
| 6 | 998525 | Security (non-corp. supplier) | Unregistered or non-corporate supplier | Registered business | 18% |
| 7 | 997159 | DSAs/Facilitators/BCs | Individual DSA/Facilitator/BC Agent | Bank, NBFC, or Business Correspondent | 18% |
| 8 | 998215 | Arbitration services | Arbitral tribunal | Business entity | 18% |
| 9 | 998397 | Sponsorship | Anyone (excluding body corporates) | Body corporate or firm | 18% |
| 10 | As notified | Government royalty/licensing | CG/SG/UT/Local Authority | Business entity | Notified |
| 11 | Any | Import of service | Foreign supplier | Indian resident | Notified |
B. RCM on Goods
| S. No. | HSN Code | Type of Goods | Who Supplies | Who Pays (RCM) | GST Rate |
|---|---|---|---|---|---|
| 1 | 0801 | Raw cashew nuts | Agriculturist | Registered entity | 5% |
| 2 | 14049010 | Tendu leaves | Agriculturist | Registered entity | 18% |
| 3 | 2401 | Tobacco leaves | Agriculturist | Registered entity | 5% |
| 4 | 5201 | Raw cotton | Agriculturist | Registered entity | 5% |
| 5 | 5004/5006 | Silk yarn | Manufacturer of silk yarn | Registered buyer | 5% |
| 6 | 7204–81 | Scrap (metal) | Unregistered dealer | Registered buyer | 18% |
| 7 | Any | Lottery (sale/supply) | State Govt./UT/Local Authority | Lottery distributor | 28% |
| 8 | Any | Seized/old goods/PSLC | Government or Local Authority | Registered buyer | As Notified |
2. 2025 Exemptions You Shouldn’t Miss
Some categories, despite falling under RCM, enjoy exemptions—particularly where small taxpayers or essential services are involved:
| Description | Applies To | Exempt? |
|---|---|---|
| Residential rent for personal use | Registered individuals for own residence | ✅ Yes |
| GTA for specified/agri goods | Per Entry 21 of NN 12/2017 CTR | ✅ Yes |
| Legal services to small unregistered businesses | If GST not applicable on recipient | ✅ Yes |
| Security services to composition dealers | If recipient is under composition scheme | ✅ Yes |
| Sponsorship of notified sports events | As per Entry 53 of NN 12/2017 CTR | ✅ Yes |
3. Renting of Immovable Property – October 2024 Update
Effective From: 10 October 2024 Govt. Notification: No. 09/2024-Central Tax (Rate) + Corrigendum
What’s Changed?
- Any renting of commercial/industrial property by an unregistered person to a registered tenant is now squarely under RCM.
- Applies even if the tenant is under the composition scheme.
- “Any property” is officially clarified as immovable property only.
- ITC not available for composition taxpayers on this RCM rent GST—it’s a pure cost.
Practical Scenario: Let’s say a composition dealer rents a small office from an unregistered individual:
- Monthly rent = ₹40,000
- GST payable = ₹7,200 (18%)
- Must be paid in cash ledger, reported in GSTR-4, and no ITC allowed.
4. Post-October 2024 Compliance Checklist
Check all property lease/rent agreements—identify if landlord is unregistered If yes, apply 18% GST under RCM (from October 10 onwards) Composition taxpayers: remember no input credit on such RCM Maintain rent receipts, agreements, and payment evidence Report correctly in GSTR-3B (regular) or GSTR-4 (composition)
5. Referenced Sources & Notifications
- Notification 09/2024 – Central Tax (Rate), dated 8-Oct-2024
- CBIC Corrigendum, issued 22-Oct-2024
- GST Council Meeting – 54th Session, Sept 2024
- Cross-reference: Latest RCM charts from TaxConcept, TaxGuru, CAclubindia
6. Tips for Smooth RCM Compliance
- Maintain a live RCM master sheet with updated codes and rates
- Double-check each inward transaction—RCM isn’t always obvious
- Pay RCM dues on time—delays mean interest and late fees
- Don’t forget: exemptions change often—verify before skipping tax
Final Word:
RCM remains a critical compliance item that’s easy to miss—but costly if ignored. With composition dealers now included in key changes like property rent, businesses need to be extra careful in 2025. Set up monthly RCM reviews and don’t wait till the filing deadline to fix a mismatch.