Reverse Charge Mechanism Under GST: Where Businesses Still Make Errors
Under GST, the supplier ordinarily collects and deposits the tax. The Reverse Charge Mechanism, governed by Sections 9(3) and 9(4) of the CGST Act, reverses that principle and makes the recipient liable. The errors are usually procedural: paying RCM through Input Tax Credit rather than the electronic cash ledger, overlooking legal, director, and imported digital services, or treating purchases from unregistered suppliers as automatically covered under Section 9(4). Missed RCM liability rarely surfaces once; it compounds through unpaid tax and interest under Section 50, usually at audit.
Read More