Published 18 October 2026
Under reverse charge, the business that receives the supply pays the tax, and it has to do work that is normally the supplier’s. It must know that the supply falls in one of the notified lists, issue an invoice to itself when the supplier is unregistered, and fix the date the tax falls due. It then pays that tax in cash, even with credit sitting in the ledger. Only after paying can it take the credit back, in the same return. Each of those steps has its own provision, and most demands on reverse charge come from missing one of them. The usual cases are a lawyer’s bill booked late, a director’s sitting fee paid without tax, and rent paid to an unregistered landlord since October 2024.
This guide covers the two powers that create reverse charge, the lists as they stand on 18 October 2026, and the documents, timing, payment and credit. Imports of services, the largest reverse charge item for many businesses, are covered in GST on Import of Services. Goods transport agencies are covered in Goods Transport Agencies: Forward or Reverse Charge.
Two powers: notified supplies, and purchases from unregistered persons
Section 9(3) allows the Government, on the Council’s recommendation, to “specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient”. All the provisions of the Act then apply to the recipient “as if he is the person liable for paying the tax”. The supplier may be registered or not. What matters is the category.
Section 9(4), as substituted from 1 February 2019, is narrower. It allows the Government to specify “a class of registered persons” who, for “specified categories of goods or services or both received from an unregistered supplier”, pay the tax as recipient. Here both the class of buyer and the supplier’s status matter.
Sections 5(3) and 5(4) of the IGST Act give the same two powers for inter-State supplies. Section 2(98) of the CGST Act defines “reverse charge” by reference to all four sub-sections.
Section 9(4) is not a general rule that anything bought from an unregistered supplier attracts tax. That was the original 2017 text, which was suspended and then replaced. Today it applies only through Notification No. 07/2019-Central Tax (Rate) (below).
The lists in force
Services: Notification No. 13/2017-Central Tax (Rate), with Notification No. 10/2017-Integrated Tax (Rate) for inter-State supplies. As amended up to Notification No. 07/2025-Central Tax (Rate), the table covers:
| Entry | Supply | Who pays |
|---|---|---|
| 1 | Goods transport agency, unless the GTA has opted for forward charge and declared it on the invoice (Annexure III) | Factory, society, co-operative, registered person, body corporate, firm or casual taxable person that pays freight |
| 2 | Individual advocate (including senior advocate) or firm of advocates, legal services | Business entity |
| 3 | Arbitral tribunal | Business entity |
| 4 | Sponsorship, by any person other than a body corporate (from 16 January 2025) | Body corporate or partnership firm |
| 5 | Central or State Government, Union territory or local authority, to a business entity, other than renting of immovable property and the listed exclusions (speed post and other services of the Department of Posts and Indian Railways, aircraft and vessel services, transport of goods or passengers) | Business entity |
| 5A | Government (other than Indian Railways) renting immovable property | Person registered under the CGST Act |
| 5AA | Renting of a residential dwelling (from 18 July 2022) | Any registered person |
| 5AB | Renting of any property other than a residential dwelling, by an unregistered person (from 10 October 2024) | Any registered person other than a composition taxpayer (exclusion from 16 January 2025) |
| 5B, 5C | Transfer of development rights or FSI, and long-term lease of land (30 years or more), for a project | Promoter |
| 6 | Director of a company or body corporate | The company or body corporate |
| 7 | Insurance agent | Insurer |
| 8 | Recovery agent | Bank, financial institution or NBFC |
| 9, 9A | Copyright in original dramatic, musical or artistic works; and, for authors, literary works unless the author opts for forward charge | Music company, producer, publisher |
| 10 | Members of the RBI’s Overseeing Committee | RBI |
| 11, 12, 13 | Individual direct selling agents; business facilitators; agents of business correspondents | Bank or NBFC; bank; business correspondent |
| 14 | Security services, by a supplier other than a body corporate | Registered person, other than a composition taxpayer or a government body registered only for TDS |
| 15 | Renting of a passenger motor vehicle with fuel, by a non-corporate supplier not charging 6 per cent CGST | Body corporate |
| 16 | Lending of securities under SEBI’s scheme | Borrower |
Goods: Notification No. 4/2017-Central Tax (Rate), with Notification No. 4/2017-Integrated Tax (Rate). As amended up to Notification No. 06/2024-Central Tax (Rate):
- cashew nuts not shelled or peeled, bidi wrapper (tendu) leaves, tobacco leaves and raw cotton, supplied by an agriculturist to a registered person
- specified mint oils, from an unregistered person to a registered person
- silk yarn, by a person who makes it from raw silk or cocoons
- lottery, supplied by a State Government, Union territory or local authority to a lottery distributor or selling agent
- used vehicles, seized and confiscated goods, old and used goods, and waste and scrap, supplied by government (other than Indian Railways, from 20 October 2023) to a registered person
- Priority Sector Lending Certificates
- metal scrap of Chapters 72 to 81, from an unregistered person to a registered person (from 10 October 2024)
Purchases from unregistered persons: Notification No. 07/2019-Central Tax (Rate), under section 9(4). This applies only to promoters of real estate projects. They pay tax on goods and services that make up the shortfall from the minimum share of purchases from registered suppliers; on cement from an unregistered supplier (the entry as substituted from 1 October 2019); and on capital goods for a project taxed at the concessional rates. How the shortfall is computed is covered in GST for Real Estate Developers.
What the 2025 changes did and did not do. Notification No. 07/2025-Central Tax (Rate) of 16 January 2025 made two changes. Sponsorship by a body corporate moved to forward charge. Composition taxpayers were taken out of the commercial-rent entry. The September 2025 rate rationalisation (Notifications No. 9/2025 and 15/2025-Central Tax (Rate), from 22 September 2025) changed rates, including for goods transport agencies, and redefined a GTA to exclude an e-commerce operator providing local delivery. CBIC’s list shows no amendment to Notification No. 13/2017 or No. 4/2017 after January 2025. The reverse charge goods carry whatever rate the 2025 rate schedules now give them.
The documents
A self-invoice, where the supplier is unregistered. Section 31(3)(f) requires a registered person liable under section 9(3) or 9(4) to “issue an invoice in respect of goods or services or both received by him from the supplier who is not registered”. Since 1 November 2024 it must be issued “within the period as may be prescribed”. Rule 47A fixes that period at “thirty days from the date of receipt of the said supply”. The section’s Explanation treats a supplier registered only to deduct TDS as unregistered. The invoice carries the particulars in rule 46, including whether tax is payable on reverse charge.
No self-invoice where the supplier is registered. A registered advocate or GTA issues its own invoice marked reverse charge. It reports the invoice in table 4B of its GSTR-1, from where it reaches the recipient’s GSTR-2B (Filing GSTR-1).
A payment voucher. Section 31(3)(g) requires the recipient liable under section 9(3) or 9(4) to “issue a payment voucher at the time of making payment to the supplier”. Rule 52 sets its contents. The voucher is required whether or not the supplier is registered.
When the tax falls due
The time of supply follows special rules (Time of Supply).
- Goods, under section 12(3): the earliest of the date of receipt; the date of payment, meaning the earlier of the entry in the recipient’s books and the debit to its bank account; and “the date immediately following thirty days from the date of issue of invoice” by the supplier.
- Services, under section 13(3): the earlier of the date of payment and the day after sixty days from the supplier’s invoice. Since 1 November 2024, clause © applies where the recipient must issue the invoice: the time of supply is “the date of issue of invoice by the recipient”.
- Fallback. Where none of these can be determined, the date of entry in the recipient’s books.
Clause © ties the time of supply on a self-invoiced purchase to the self-invoice. Rule 47A’s thirty days stop that date being pushed back indefinitely. Tax on a self-invoice issued late is still due with interest, and the late invoice may also attract a penalty under section 122 (Circular No. 211/05/2024-GST).
Paying: only in cash
The credit ledger can be used only for “output tax” (section 49(4)). Section 2(82) defines output tax as tax on supplies made by the taxable person “but excludes tax payable by him on reverse charge basis”. Reverse charge tax therefore has to be debited to the electronic cash ledger. A business with a large credit balance still needs cash for it. In GSTR-3B the liability goes in table 3.1(d), “inward supplies liable to reverse charge”, and is paid in the reverse charge column of table 6.1 (Filing GSTR-3B).
Taking the credit back
Tax paid on reverse charge is input tax for the recipient, subject to the usual conditions in section 16 and the blocks in section 17(5). Rule 36(1)(b) allows credit on a self-invoice “subject to the payment of tax”. Because the tax is paid through the return, the credit is claimed in table 4 of the same GSTR-3B:
- 4(A)(2) for imports of services
- 4(A)(3) for other reverse charge supplies, auto-filled from GSTR-2B where the supplier is registered and entered by the taxpayer where it is not
The portal compares these with the RCM Liability/ITC Statement it has kept since August 2024. Credit above the statement’s balance plus the 3.1(d) payment draws a warning, which GSTN has said will become a block. How the statement works is in Reporting Credit in GSTR-3B Table 4.
Time limit. For a self-invoice, Circular No. 211/05/2024-GST holds that the financial year for the section 16(4) limit is “the financial year in which the invoice has been issued by the recipient”. Where the supplier issued the invoice, the ordinary rule applies (Time Limits for Claiming Credit).
Registration. Section 24 requires “persons who are required to pay tax under reverse charge” to register whatever their turnover.
The cases
The limit of the notification power. Union of India v Mohit Minerals Pvt Ltd (Supreme Court, 19 May 2022, Civil Appeal No. 1390 of 2022). An importer bought coal on CIF terms. A foreign shipping line carried it, paid by the foreign seller. Entry 10 of Notification No. 10/2017-Integrated Tax (Rate) made the importer pay IGST on reverse charge on that ocean freight. The Court accepted that the importer could be treated as the recipient. It held that section 5(4) “enables the Central Government to specify a class of registered persons as the recipients”, and that the notification “did not specify a taxable person different from the recipient prescribed in Section 5(3)”. But the levy failed because the importer already paid IGST on the CIF value of the goods, which included the freight. A separate levy on the freight “would be in violation of Section 8 of the CGST Act”, the composite supply rule. Entry 10 was omitted from 1 October 2023 by Notification No. 13/2023-Integrated Tax (Rate).
The earlier periods. Sunrise Timply Company Pvt Ltd v Union of India (Calcutta High Court, 19 January 2026, WPA 10415 of 2025). Tax on ocean freight for July 2017 to March 2018 was confirmed in January 2025. The officer treated the Supreme Court’s judgment as applying only from the date of the 2023 amendment. The High Court set the order aside. It held that a judgment declaring the law “applies retrospectively unless it is expressly made prospective”, and that the notification “cannot trump statutory provisions”. The two cases together show that a notification under section 9(3) or 5(3) can name who pays, but it cannot create a liability the Act does not.
What to have ready
| Item | Where it comes from |
|---|---|
| Purchase and expense ledgers tagged by reverse charge entry (legal, director, rent, security, sponsorship, GTA, government services) | Books |
| Registration status of each such supplier on the date of receipt | Portal search; supplier master |
| Self-invoices issued, with dates of receipt, to test the thirty days | Books |
| Payment vouchers | Books |
| GSTR-2B reverse charge section, for registered suppliers’ invoices | Portal |
| Cash ledger balance enough for the reverse charge tax | Portal |
| RCM Liability/ITC Statement closing balance | Portal, Services > Ledger |
Consequences, and what can be put right
- Tax not paid on time. Interest under section 50(1) runs from the time of supply. The tax is recovered under section 73, 74 or 74A. The credit can be taken only once the tax is paid.
- Paid through the credit ledger. This is not payment, because reverse charge tax is not output tax. The tax has to be paid again in cash, and the credit debited wrongly is restored only by the routes in Correcting Mistakes in Returns.
- Missed in an earlier month. It is added to 3.1(d) of a later GSTR-3B, or paid through DRC-03, with interest. The credit follows in 4(A), within the RCM statement and section 16(4).
- Paid when not due. For example, sponsorship from a body corporate after 16 January 2025 paid as reverse charge. The supplier remains liable under forward charge. The recipient’s payment is recovered by refund of excess tax (Excess Tax Paid, and Refunds to Unregistered Buyers).
The procedure in order
- Tag every inward supply against the entries in Notifications No. 13/2017 and 4/2017, and No. 07/2019 for promoters.
- Check whether the supplier was registered on the date of receipt.
- For unregistered suppliers, issue a self-invoice within thirty days of receipt. Issue a payment voucher when paying any reverse charge supplier.
- Fix the time of supply under section 12(3) or 13(3).
- Report the liability in table 3.1(d) of GSTR-3B and pay it from the cash ledger.
- Claim the credit in 4(A)(2) or 4(A)(3) of the same return, within the RCM statement’s limit, and reverse any blocked part.
- Keep the self-invoices, vouchers and the RCM statement reconciled for the annual return.
The next guide covers the largest reverse charge item: imports of services, including services from a related person abroad for no consideration.