Last reviewed: 24 September 2026. We have separately covered RCM on rent and RCM on ocean freight in detail. This note covers the rest of the reverse-charge list under Notification 13/2017-Central Tax (Rate), as amended – the categories that quietly trip up businesses because nobody flags them until a GST audit or a vendor invoice without tax charged raises the question.
The reverse charge categories businesses most often miss
| Service | Who pays RCM | Key condition |
|---|---|---|
| Goods Transport Agency (GTA) | Specified recipients (companies, registered persons, etc.) | Recipient chooses RCM (5%, no ITC) or the GTA opts to charge forward tax (12%, with ITC) via annual declaration |
| Legal services | Business entity receiving the service | Applies when an advocate or firm of advocates supplies services to a business entity located in the taxable territory |
| Director's services | The company | Services supplied by a director to the company (sitting fees, commission) – distinct from a director's salary as an employee, which is outside GST |
| Import of services | The Indian recipient | Applies whenever a service is imported for consideration, even where the foreign supplier has no Indian presence |
| Sponsorship services | The body corporate or partnership firm receiving sponsorship | Common in event sponsorships, sports sponsorships and similar arrangements |
| Security services | The registered recipient | Where supplied by a person other than a body corporate to a registered person (with specified exclusions) |
| Renting of motor vehicle | The body corporate recipient | Where the supplier is not a body corporate and does not charge GST at 12% in the invoice |
| Recovery agent services | The bank/NBFC/financial institution | Services by a recovery agent to a banking company, financial institution or NBFC |
Why this list matters more than it looks
RCM liability is not optional and is not satisfied by the vendor simply not charging GST on the invoice. If a service falls in a notified RCM category, the recipient owes the tax directly regardless of what the invoice says – failing to self-assess it is a genuine compliance gap, not a saving. This is one of the most common findings in a GST health check, precisely because these categories (director fees, legal services, GTA) are routine monthly expenses that finance teams process on autopilot.
Worked example. A private company pays its independent directors sitting fees of ₹2 lakh in a quarter and engages a law firm for ₹3 lakh in litigation support, both without GST charged on the invoices (correctly, since these fall under RCM). The company must self-invoice, pay 18% GST under RCM on both (₹36,000 on director fees, ₹54,000 on legal fees), report it in GSTR-3B Table 3.1(d), and can claim the corresponding ITC if the expense is otherwise eligible – a net cash-flow timing cost, not a permanent one, but a real compliance step that is easy to miss if nobody is specifically checking for it.
Practical checklist
- Review recurring vendor categories – director fees, legal retainers, security contracts, GTA freight, motor vehicle rentals – against the RCM list at least once a year, since vendor status (body corporate or not) can change.
- Confirm whether your GTA vendor has opted for forward charge (12%, with a valid declaration on file) or defaults to RCM (5%) – do not assume based on last year's treatment.
- Any payment to a foreign service provider (software subscriptions, consulting, marketing services) needs an import-of-services RCM check, even for small amounts – there is no de minimis exemption purely because the sum is modest.
- Self-invoice and report RCM liability in the same return period as the expense, not retrospectively when a GST audit flags it.
Getting this wrong is expensive in two directions
Missing an RCM liability means interest accrues from the original due date, plus possible penalty on audit or scrutiny. But over-applying RCM – treating a supply as reverse charge when it is not – creates its own problem: you have paid tax you were not liable for and the vendor may separately have charged (or should have charged) forward tax, creating a double-payment situation that takes real effort to unwind. Getting the classification right the first time, category by category, is cheaper than fixing either error later.
Frequently asked questions
Does RCM apply if my vendor is registered under GST?
It depends on the specific category, not just registration status. Some RCM categories (like legal services from an advocate, or director's services) apply based on the nature of the service and the recipient type, regardless of whether the supplier happens to be registered.
Can I claim ITC on GST paid under reverse charge?
Generally yes, if the expense is otherwise eligible for ITC under the normal rules (used for business, not blocked under Section 17(5)). RCM tax paid is treated like any other input tax for ITC eligibility purposes.
What happens if I never charged myself RCM on director sitting fees?
The liability does not disappear – it accrues with interest from the original due date. On discovery (self-review or audit), paying it voluntarily with interest through the return is the sensible way to close the gap, rather than waiting for a notice.
Is RCM applicable on all legal services, or only litigation?
It applies to services by an advocate or firm of advocates to a business entity, which is broader than litigation alone and can include advisory and drafting services, subject to the specific facts.
My company pays a foreign SaaS vendor a small monthly subscription. Does RCM apply?
Import of services attracts RCM regardless of the amount, so yes in principle – there is no threshold exemption purely because the value is small. Confirm the specific classification and any applicable exemption for your situation.
Where do I report RCM liability and the corresponding ITC in GSTR-3B?
RCM liability is reported in Table 3.1(d) (inward supplies liable to reverse charge), and the eligible ITC is claimed through the standard ITC tables in the same return.
We run RCM health checks across your vendor base and handle the self-invoicing and return reporting.
GST Compliance Services GST Registration Talk to usThis article summarises the reverse charge categories under Notification 13/2017-Central Tax (Rate), as amended, as understood on the date of review. General information, not advice on your specific facts – confirm details against the current forms/portal and consult us or your tax advisor before acting. CA Somesh Chandak & Associates, FRN 158694W.