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Tax · Finance · Business
GST17 June 2026

GST Reverse Charge: When Does a Small Business Pay GST for Its Supplier?

Reverse charge (RCM) means the buyer pays GST to the government instead of the supplier collecting it. It applies in two cases: Section 9(3) of the CGST Act, a notified list of supplies such as a goods transport agency, advocate or legal services, sponsorship, and a director's services to the company; and Section 9(4), a now-narrow set of cases where a notified recipient buys from an unregistered supplier. A small GST-registered business is squarely caught by the Section 9(3) list, must pay the tax in cash and not from input tax credit, must raise a self-invoice under Section 31(3)(f) when the supplier is unregistered, and stays liable even under the composition scheme, where no credit can be claimed on the RCM paid.

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Last reviewed: 17 June 2026