Why Understanding Reverse GST Is Essential for Business Cost Optimization

Select suppliers who provide taxable goods or services are subject to reverse GST (Goods and Services Tax).

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The recipient of services or goods, not the supplier, is responsible for paying GST under the reverse charge mechanism.

This transfers tax payment obligations from the seller to the buyer, especially in certain situations specified by the government.

To learn how the reverse charge mechanism operates and how to efficiently optimize costs for businesses, read this article in detail.

What Is the Reverse Charge Mechanism (RCM) Under GST?

The Reverse Charge Mechanism (RCM) under GST is a method in which the recipient becomes liable for paying GST instead of the supplier of goods or services.

Typically, in reverse GST, the buyer pays the provider GST, which the seller then deposits with the government. But under RCM, the person who receives the products or services is in charge of paying the government the GST directly.

When a registered dealer purchases products or services from an unregistered dealer, for example, or certain notified supplies, such as services rendered by an insurance agent to an insurer, this procedure is usually applicable.

When Is Reverse GST (RCM) Applicable?