Reverse charge is a mechanism under the Goods and Services Tax (GST) system where the responsibility for paying GST shifts from the supplier to the recipient. This means that instead of the seller collecting the tax from the buyer, the buyer is required to pay the GST directly to the government.

Key Points:

• Liability Shift:
  Under the reverse charge mechanism (RCM), if you are the recipient of certain specified goods or services, you must pay the applicable GST even if the supplier does not charge it.

• Applicable Situations:
  Reverse charge is applicable in specific cases mandated by the GST law. This can include:

  • Certain categories of goods and services notified by the government.

  • Supplies from unregistered persons where the recipient is registered.

  • Transactions involving government departments or agencies.

• Relevant Provisions:
  The provisions for reverse charge are primarily found in the GST Acts (both CGST and IGST), which outline the circumstances and conditions under which RCM applies.

• Compliance:
  As a recipient, if you fall under the reverse charge mechanism, you must:

  • Pay the GST on the purchase.

  • Ensure proper accounting and reporting in your GST returns.

  • Claim input tax credit (if eligible) on the tax paid under reverse charge.