RCM (Reverse Charge Mechanism)
Direct Definition
A GST provision where the recipient of freight services pays the tax directly to the government instead of the transporter.
Detailed Explanation & Statutory Rules
Under 5% GST for GTA services, the Reverse Charge Mechanism applies if the freight is paid by a registered factory, society, cooperative, company, or registered person under GST. The transporter charges no tax on the bill; the customer self-assesses and pays 5% GST.
Legal Reference / Act: Notification No. 13/2017-Central Tax (Rate), Serial No. 1.
Practical Indian Freight Example
"Bilty issues an invoice of ₹50,000 freight with "Tax Payable under RCM: Yes". The corporate party pays ₹50,000 to the transporter and remits ₹2,500 (5%) directly to the GST department."
Key Questions & Answers
Does the transporter file GSTR-1 for RCM invoices?
Yes, RCM invoices are reported under Table 4B of GSTR-1 as "B2B Reverse Charge".
Other Useful Transport Terms:
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