# Charge of GST – Charging Sections & Reverse Charge

## Charging Sections

GST is levied through:

Section 9 of the CGST Act, 2017 – levies CGST on intra-state supplies.
Section 5 of the IGST Act, 2017 – levies IGST on inter-state supplies.

## Reverse Charge Mechanism (RCM) [Section 2(98)]

### Definition

Reverse charge means the liability to pay tax is on the recipient of the supply (instead of the supplier) in respect of notified categories of supply.

### When Does RCM Apply?

CGST/IGST is payable by the recipient under RCM in two scenarios:

### (i) Section 9(3) / 5(3) – Notified Categories

Supply of specified categories of goods/services notified by the Government. The supplier may be registered or unregistered – RCM applies regardless.

### (ii) Section 9(4) / 5(4) – Specified Unregistered → Specified Registered

Supply of specified goods/services by an unregistered person to a specified class of registered persons (e.g., promoters in real estate).

## Implications of RCM

All provisions of the CGST/IGST Act apply to the recipient as if he is the person liable to pay tax.
The recipient must be registered (Section 24 makes RCM-recipients compulsorily registrable).
Recipient pays via electronic cash ledger (cannot use ITC for RCM liability).
Recipient can claim ITC of the RCM tax paid (subject to conditions).
Recipient must issue a self-invoice if supplier is unregistered.

Worked example

### Example 1

Example 1 (Self-Invoice): A registered manufacturer M procures silk yarn from an unregistered weaver under Sec 9(3). M must issue a self-invoice and pay GST under RCM, then claim ITC.

### Example 2

Example 2 (Sec 9(4)): Promoter P (registered) procures cement from unregistered supplier for a real estate project. → RCM applies under Sec 9(4); P pays GST.

⚠️ Common exam mistakes

Believing RCM applies only when supplier is unregistered – Sec 9(3) RCM applies regardless of supplier's registration status.
Paying RCM liability through ITC – RCM must be paid in CASH only.
Forgetting to issue a self-invoice when buying from an unregistered RCM supplier.

Bare-Act text Sections 9(3), 9(4) CGST; Sections 5(3), 5(4) IGST; Section 2(98) · CGST Act, 2017 / IGST Act, 2017 · click to expand

Section 9(3) CGST: The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. Section 9(4) CGST: The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient.

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Charging Sections and Reverse Charge Mechanism (RCM)

Worked example

⚠️ Common exam mistakes