Definition:

Reverse charge is a mechanism where the recipient of the goods and/or services is liable to pay tax instead of the supplier.

Application of Reverse Charge in GST:

• If a vendor who is not registered under GST, supplies goods to a person who is registered under GST, then Reverse Charge would apply.
• This means that the GST will have to be paid directly by the receiver to the Government instead of the supplier.
• The registered dealer who has to pay GST under reverse charge has to do self-invoicing for the purchases made.
• For Inter-state purchases the buyer has to pay IGST. For Intra-state purchased CGST and SGST has to be paid under RCM by the purchaser.