Glossary
Reverse Charge
Reverse Charge
Reverse Charge Mechanism (RCM) Under the Reverse Charge Mechanism, the liability to pay GST is shifted from the supplier of goods or services to the recipient. This ensures tax collection where the supplier is unregistered or provides specified services.
Where it appears in practice
It is critical when dealing with unregistered suppliers, importing services, or using specific services like legal services or transport. Failing to pay RCM taxes can result in penalties [VERIFY].
A worked example
If a registered business hires a goods transport agency (GTA) that does not pay GST, the business must pay the GST directly to the government under RCM instead of paying it to the GTA.
Related terms
- Forward Charge
- Input Tax Credit
- Unregistered Supplier
Let the practice handle it
This term sits inside real compliance work — returns, filings, and deadlines. That work is one of the services the practice runs end to end.
GST Returns