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Microlesson · 5-min read

Supplies of Goods Taxable under Reverse Charge u/s 9(3)

# Supplies of Goods Taxable Under Reverse Charge [Section 9(3)]

The Government has notified certain goods under Section 9(3) of CGST Act where the recipient pays GST under reverse charge. Key entries:

## Notified Goods Under RCM

SupplierGoodsRecipient
AgriculturistCashewnuts (not shelled/peeled), bidi wrapper leaves, tobacco leaves, raw cottonRegistered person
State Govt / UT / Local AuthorityLotteryLottery selling/distribution agent
ManufacturerSilk yarnRegistered person
CG / SG / LA / UTUsed vehicles, confiscated goods, old & used goods, waste & scrapRegistered person
Registered personPriority Sector Lending Certificate (PSLC)Registered person

## Key Points to Remember

1. Agriculturist supplies – only the four specified items are under RCM (cashewnuts not shelled/peeled, bidi wrapper leaves, tobacco leaves, raw cotton). Other agricultural produce is not.

2. Recipient must be a 'registered person' – if the buyer is unregistered, RCM does not arise; instead, the agriculturist (if also unregistered) is outside GST.

3. Lottery sold by SG/UT/LA – lottery distributor pays GST under RCM.

4. Silk yarn from manufacturer – the manufacturer is the supplier; recipient (registered) pays under RCM.

5. Government scrap, old/used goods – registered recipient pays under RCM. (Note: when sold to unregistered person, supplier i.e. govt pays.)

6. PSLC – Banks/financial institutions inter se trade PSLCs; buyer (registered) pays under RCM.

Worked example

### Example 1

Example 1 (Cashew): Farmer F (agriculturist) sells unshelled cashews to Cashew Co. (registered). → Cashew Co. pays GST under RCM.

### Example 2

Example 2 (PSLC): Bank A (registered) sells PSLC to Bank B (registered). → Bank B pays GST under RCM.

### Example 3

Example 3 (Silk Yarn): Mr. M (silk yarn manufacturer) sells silk yarn to ABC Textiles (registered). → ABC pays GST under RCM.

### Example 4

Example 4 (Lottery): State of Kerala sells lottery tickets to KLD (registered distributor). → KLD pays GST under RCM.

⚠️ Common exam mistakes

  • Applying RCM on raw cotton sold by a trader – RCM under this entry applies only when supplier is an AGRICULTURIST.
  • Believing all goods supplied by Government are under RCM – only the notified categories (used vehicles, confiscated goods, old/used goods, waste/scrap) trigger RCM for registered recipients.
  • Treating supplies by agriculturist of fruits, vegetables, food grains etc. as RCM – only the four specified items are under RCM.
Bare-Act text Section 9(3) · CGST Act, 2017 / Notification No. 4/2017-CT(R) · click to expand
Section 9(3) CGST Act read with Notification No. 4/2017-CT(R) dated 28.06.2017 (and amendments) notifies categories of goods for reverse charge.
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