The list of goods and services reverse charges applicable under GST is an important reference for businesses. Under the Reverse Charge Mechanism (RCM), the liability to pay Goods and Services Tax shifts from the supplier to the buyer. Normally, the supplier collects and pays GST, but in RCM cases, the recipient pays it directly.
If you run a business in India, you must know exactly where reverse charge applies. Otherwise, you risk penalties and interest due to missed payments. This article provides a detailed list of goods and services covered under RCM, along with compliance tips.
Goods Covered Under Reverse Charge Mechanism
The government has notified certain goods where RCM applies. Businesses must pay GST on the following:
| Goods | Supplier | Recipient Liable |
|---|---|---|
| Cashew nuts (not shelled/peeled) | Agriculturist | Registered buyer |
| Bidi wrapper leaves (tendu leaves) | Agriculturist | Registered buyer |
| Tobacco leaves | Agriculturist | Registered buyer |
| Silk yarn | Manufacturer | Registered dealer |
| Raw cotton | Agriculturist | Registered dealer |
| Lottery tickets | State Government / Agent | Lottery distributor |
This list of goods reverse charges applicable under GST often impacts manufacturers, traders, and wholesalers who purchase directly from farmers or unregistered suppliers.
Services Covered Under Reverse Charge Mechanism
A wide range of services also fall under RCM. Below is a list of services reverse charges applicable under GST:
| Service | Supplier | Recipient Liable |
|---|---|---|
| Legal services | Advocate or law firm | Business entity |
| Services by a director | Company director | Company |
| Rent of motor vehicle | Individual service provider | Business entity |
| Security services | Security agency | Registered business |
| Sponsorship services | Sponsor | Business entity |
| Goods Transport Agency (GTA) services | Transporter | Registered consignee |
| Import of services | Foreign supplier | Indian recipient |
Businesses receiving these services must self-invoice and pay GST under RCM.
Why Knowing the List of Goods and Services Reverse Charges Applicable Matters
Understanding the list of goods and services reverse charges applicable under GST is essential because:
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It ensures correct GST payment and avoids penalties.
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It helps in claiming Input Tax Credit (ITC) properly.
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It prevents disputes with suppliers regarding tax liability.
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It improves financial planning for businesses.
Compliance Requirements Under RCM
When you purchase goods or services under reverse charge, you must follow these steps:
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Issue a self-invoice if the supplier does not provide a GST invoice.
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Pay GST using the cash ledger (ITC cannot be used to discharge liability).
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Claim Input Tax Credit after making the payment.
By following these steps, businesses stay compliant and reduce risks.
Conclusion
The list of goods and services reverse charges applicable under GST includes items like cashew nuts, tobacco leaves, silk yarn, and services such as legal, GTA, director, and sponsorship. Businesses must carefully track these transactions, pay GST on time, and maintain accurate records for ITC claims.
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