---
title: "Reverse Charge Mechanism (RCM) in GST: Rules and Examples"
description: "Reverse Charge Mechanism (RCM) flips who pays GST. Learn when RCM applies, key notified supplies, compliance steps and ITC eligibility."
canonical_url: "https://billbabu.com/blog/reverse-charge-mechanism-gst-rules-examples"
markdown_url: "https://billbabu.com/blog/reverse-charge-mechanism-gst-rules-examples.md"
type: "blog-post"
language: "en-IN"
published: "2026-05-15"
last_updated: "2026-10-08"
author: "BillBabu Team"
category: "GST Compliance"
tags: ["rcm", "reverse charge", "gst"]
site: "BillBabu (https://billbabu.com)"
---
# Reverse Charge Mechanism (RCM) in GST: Rules and Examples

By BillBabu Team · Published 15 May 2026 · Updated 8 October 2026 · Category: GST Compliance

Reverse Charge Mechanism (RCM) flips who pays GST. Learn when RCM applies, key notified supplies, compliance steps and ITC eligibility.

## What is reverse charge?

Normally the supplier collects GST and pays it. Under RCM, the recipient pays GST directly to the government — the supplier issues a tax-free invoice. RCM is used to bring unregistered suppliers into the tax net.

## When RCM applies

Notified supplies (services from advocates, GTA, directors). Imports of services. Purchases from unregistered persons (in certain notified cases). Notified goods like cashew, tendu leaves, raw cotton.

## Compliance steps for the recipient

Self-invoice the purchase under RCM. Report the supply in GSTR-3B Table 3.1(d). Pay tax in cash (not through ITC). Claim ITC on the same RCM tax in the next month, provided it's used for business.

## Common pitfall

Many small businesses forget to self-invoice for advocate services or freight (GTA). Missing RCM compliance can trigger 100% penalty + 18% interest. Set up an automatic alert in your billing software for known RCM expense categories.

## Quick tip

BillBabu lets you tag a vendor as "RCM applicable" once — every future purchase auto-flags for self-invoice and RCM payment, with the right ITC entry in your reports.

**Built for Indian small businesses.** BillBabu is GST-compliant billing software that helps you create invoices, manage estimates, track payments and stay audit-ready — from your phone. [Learn more about BillBabu](https://billbabu.com/) or [download the app](https://play.google.com/store/apps/details?id=com.billbabu.app).

## Related guides

- [GST on Exports with EDF & Shipping Bill: Zero-Rated Supply, LUT Filing, and Invoicing Rules](https://billbabu.com/blog/gst-on-exports-lut-shipping-bill-edf-guide): Comprehensive guide to GST on exports in India: Section 16 IGST zero-rated rules, filing Form GST RFD-11 LUT, export tax invoice mandatory fields, and fixing ICEGATE SB005 errors.
- [Export Declaration Form (EDF) in India: Complete Guide to RBI Rules, FEMA Compliance & EDPMS](https://billbabu.com/blog/export-declaration-form-edf-rbi-fema-guide): Master the Export Declaration Form (EDF) in India under FEMA 1999 and RBI Master Directions. Understand non-EDI customs filing, AD bank processing, the 9-month realization deadline, and EDPMS tracking.
- [QRMP Scheme Under GST: Quarterly Returns, Monthly Payments Explained](https://billbabu.com/blog/qrmp-scheme-gst-quarterly-monthly): QRMP scheme GST guide: who qualifies (up to Rs. 5 crore turnover), monthly PMT-06 payment, IFF for B2B invoices, and quarterly GSTR-1 and GSTR-3B.

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