Master Chart on RCM under GST (With Rate and HSN/SAC)
1. Statutory & Policy Foundation
RCM is rooted in Section 9(3) (notified supplies taxed on recipient) and Section 9(4) (supplies from unregistered persons where notified) of the CGST Act, with IGST Act counterparts for inter‑state supplies. Notifications (e.g., Notification No. 13/2017‑Central Tax (Rate), Notification No. 4/2017‑Central Tax (Rate), and subsequent amendments) define specific goods/services and recipients. Policy goals: secure revenue from high‑risk/unorganized sectors, reduce evasion and use large recipients as compliance anchors.
2. How RCM Works — Quick Mechanics
- Recipient pays GST (cash ledger) and reports in GSTR‑3B.
- Recipient can claim ITC only after payment and satisfying Section 16 conditions.
- Self‑invoice required where supplier is unregistered.
- RCM entries must be reconciled monthly; non‑payment can attract interest and penalties.
3. Master Chart — Goods (Commonly Notified Items)
Below table lists commonly notified goods under RCM with indicative HSN and rates. This is illustrative — always verify latest notifications for edge cases.
| Goods / Description | Common HSN | Usual Supplier | Recipient under RCM | Indicative GST Rate |
|---|---|---|---|---|
| Cashew nuts (not shelled/peeled) | 0801 | Agriculturist/Small supplier | Registered buyer (manufacturer/trader) | 5% |
| Bidi wrapper leaves (tendu leaves) | 1404 | Forest/tendu gatherer | Bidi manufacturers | 5% |
| Tobacco leaves | 2401 | Agriculturist | Registered tobacco buyer | 5% |
| Raw cotton | 5201 | Farmer/Unregistered supplier | Registered textile/processing unit | 5% |
| Silk yarn (not put up for retail sale) | 5004 | Supplier in silk trade | Registered purchaser | 5% |
| Lottery (State Government) | 9504 | State/State authorised board | Distributor/agent | 28% |
| Scrap & certain metals (notified cases) | 7204 / others | Unregistered sellers | Registered recyclers/industry buyers | 18% |
Note: Some goods vary by notification and may be state‑specific. Rates shown are indicative — consult latest CBIC notifications for definitive position.
4. Master Chart — Services (Broadly Notified Categories)
Services notified under RCM are numerous. The table below aggregates core categories, typical SAC codes and indicative rates; practitioners should maintain a dynamic RCM list in ERP to capture future amendments.
| Service Description | Common SAC | Typical Supplier | Recipient Liable | Indicative Rate |
|---|---|---|---|---|
| Goods Transport Agency (GTA) services | 9965 | GTA operators | Registered consignees / any notified recipient | 5% (small value) / 12% optional) |
| Legal services (advocates / firms) | 9982 | Advocates / Law firms | Business recipients / corporate | 18% |
| Security services (manpower supply) | 9985 | Security agencies | Registered recipients | 18% |
| Director’s remuneration / director services | 9983 | Directors (individual) | Company / body corporate | 18% |
| Services by recovery agents to banks/NBFCs | 9985 | Recovery agents | Banks / NBFCs | 18% |
| Sponsorship services | 9983 | Sponsors | Body corporate / partnership firms | 18% |
| Renting of motor vehicles (non-corporate owner) | 9966 | Individual / non-corporate lessor | Body corporate | 5% |
| Copyrights, royalties in certain cases | 9983 / 9972 | Authors, rights holders | Publishers, producers | 12% / 18% (case specific) |
| Import of services (foreign supplier) | Varies | Foreign vendor | Indian recipient | IGST @ applicable rate |
Note: Many service categories include exclusions and conditions — e.g., GTA rules differ by invoice type/consignment value; renting may be rate‑specific. Always cross‑check latest CBIC circulars and notifications.
5. RCM: Sectoral Notes & Practical Traps
Construction / Real Estate: Builders often face RCM on supplies from unregistered contractors/suppliers and on TDR/FSI/DTC transfers. Valuation & timing of ITC are common dispute areas.
Financial Services: Banks and NBFCs must track RCM on recovery/legal/agent services; reconciliation with payments and ITC claims is vital.
Manufacturing: Raw material receipts from small or agricultural suppliers may attract RCM (e.g., raw cotton); vendor due diligence and self‑invoice protocols required.
6. Compliance Checklist for Businesses
- Maintain a dynamic RCM register (vendor-wise) in ERP.
- Issue self‑invoices for supplies from unregistered suppliers promptly.
- Pay RCM in cash ledger and record payment voucher references.
- Report RCM correctly in GSTR‑3B (Table 3.1(d)) and claim ITC under proper heads.
- Reconcile RCM entries monthly and retain documentary proof for ITC (receipts, contracts, delivery proofs, self‑invoices).
- Train procurement teams to flag potential RCM suppliers during vendor onboarding.
7. Decision Flow — Quick RCM Logic
RCM Decision Flow (simplified)
1. Is the supply of goods/services listed under Section 9(3) notifications? -> YES -> RCM applies (if recipient is notified)
2. If NO, is the supplier unregistered and supply falls under 9(4) notified categories? -> YES -> RCM applies
3. Is the supply an import of services? -> YES -> IGST under RCM
4. Is the recipient a specified class (company/body corporate/registered person)? -> Check notification conditions
5. If uncertain -> take conservative position: treat as potential RCM, obtain supplier details and advise recipient to discharge tax until clarity
8. Common Disputes & Litigation Themes
Frequent litigious issues include: (a) whether a particular service falls within a notified category (interpretation disputes), (b) valuation at which RCM should be paid (especially in composite supplies), (c) time of supply and interest liabilities, (d) ITC denial where conditions not strictly met, and (e) applicability of Section 9(4) vs general exceptions.
9. Practical Recommendations
- Maintain vendor KYC that captures registration status and GSTIN snapshots periodically.
- Embed RCM tax codes in procurement systems to auto‑flag transactions requiring self‑invoices.
- Keep a small working capital buffer for RCM cash outflows—ITC can be claimed later but payment is upfront.
- Engage tax counsel for high‑value or ambiguous categories (TDR, used goods, cross‑border services).
10. Conclusion
RCM is a potent compliance lever in GST, essential to bring informal or high‑risk supplies within the tax net. Its dynamic nature requires businesses to be vigilant, maintain updated vendor data, and design processes that ensure timely payment and ITC reconciliation. A well‑maintained RCM master chart (mapped to HSN/SAC and rate columns) in corporate ERPs reduces errors, prevents interest/penalty exposure, and improves GST governance.