Normally the seller collects GST from you and pays the government. Under reverse charge, the law flips it: the buyer pays the tax directly. If that buyer is you, ignoring RCM quietly builds a liability.

Where RCM commonly applies

  • Notified services such as those from goods transport agencies, advocates and certain government services
  • Specified goods notified from time to time
  • Certain transactions with unregistered suppliers, where notified
  • Import of services — a frequent miss for businesses paying foreign software or consultants

The mechanics

You compute the tax on the purchase, pay it in cash (RCM cannot be settled from input credit), and then — if the expense is otherwise eligible — claim it back as input credit. Net cash cost is often nil, but the reporting is mandatory.

Why it surfaces in audits

RCM leaves a trail: your expense ledgers show transport, legal fees or foreign payments, and officers check whether matching reverse-charge tax appears in your returns. Reconstructing years of missed RCM with interest is painful.

Unsure what applies to your expenses? Our GST team maps RCM in your first review — get in touch.