#RCM in GST

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Reverse Charge Mechanism (RCM) in Goods and Services Tax (GST)

The Goods and Services Tax (GST) has significantly simplified the indirect tax structure in India. However, one concept under GST that often confuses businesses is the Reverse Charge Mechanism (RCM). Unlike the usual tax payment system where the supplier collects and remits the tax, RCM flips the responsibility, making the recipient of goods or services liable to pay GST directly to the government.

In this blog, we'll explore what RCM is, when it applies, key provisions, compliance requirements, and practical examples to help you understand its real-world impact.

What is Reverse Charge Mechanism (RCM)?

Under the Reverse Charge Mechanism, the liability to pay tax shifts from the supplier to the recipient of goods or services. This mechanism is primarily designed to bring unregistered suppliers, imported services, and certain notified categories under the tax net.

Legal Provisions for RCM in GST

RCM is governed by the following sections of the CGST Act, 2017:

Section 9(3): Tax is payable on notified goods and services by the recipient.

Section 9(4): Tax is payable by a registered person on goods/services received from an unregistered supplier, subject to certain conditions and exemptions.

Section 5(3) and 5(4) of the IGST Act: These deal with inter-state supplies and mirror the provisions of Section 9 of the CGST Act.

Types of Reverse Charge in GST

1. RCM on Notified Goods and Services (Section 9(3))

The government, on the recommendation of the GST Council, has notified specific categories of goods and services where RCM is applicable. Some examples include:

2. RCM on Supply from Unregistered Suppliers (Section 9(4))

This provision initially created a lot of compliance burden and was suspended for a while. Currently, RCM under Section 9(4) applies only in certain cases like:

Inward supplies received by promoters and builders for construction purposes.

Certain procurement by government entities or PSUs from unregistered suppliers.

Input Tax Credit (ITC) under RCM

Yes, the recipient who pays tax under RCM is eligible to claim Input Tax Credit (ITC), provided the goods/services are used for business purposes. However:

The ITC can only be claimed after the tax is paid.

Proper documentation (like self-invoice and payment proof) must be maintained.

Compliance Requirements under RCM

Self-Invoicing: If goods/services are received from an unregistered dealer, the recipient must issue an invoice on their behalf.

Payment Vouchers: A payment voucher must be issued at the time of making payment.

Monthly GST Returns (GSTR-3B): RCM liabilities must be disclosed and paid in cash (ITC cannot be used for this payment).

GSTR-1: Though not required for outward supplies under RCM, inward supplies under RCM should be maintained accurately.

Examples of Reverse Charge Mechanism

Example 1:

A company avails legal services from an individual advocate. Since the advocate is not liable to collect GST, the company must pay GST under RCM and then claim ITC.

Example 2:

A registered builder purchases cement from a local unregistered dealer. The builder must pay GST on this supply under Section 9(4) and can claim ITC if used for taxable output supplies.

Penalties for Non-Compliance with RCM

Failure to comply with RCM provisions can result in:

Interest on unpaid tax (currently 18% p.a.),

Penalties under Sections 73 or 74 of the CGST Act,

Potential loss of ITC for non-payment or incorrect reporting.

Latest Updates on RCM (As of 2025)

RCM continues to be an evolving area with frequent notifications.

Recent updates include changes in RCM applicability for e-commerce operators, expanded GTA rules, and clarifications for real estate sector.

For the most recent changes, refer to GST Portal or consult a tax professional.

Read More: Documents Checklist Required for GST Registration 

Conclusion

The Reverse Charge Mechanism under GST plays a crucial role in ensuring tax compliance, especially where suppliers are not registered or are located outside India. Though it adds a layer of responsibility for the recipient, understanding the rules, timelines, and documentation requirements can help businesses stay compliant and optimize their Input Tax Credit.

If you deal with any categories under RCM, it's essential to maintain proper records, stay updated on notifications, and ensure timely payment and reporting of tax.

[solubiliss]

Hi! RCM is Reverse charge mechanism under GST. This blog explains about RCM and the supply. Hope you find it useful.

[taxationplanning]

Impact Of New GST RCM Provision On GST Registered Persons

What is The New GST RCM Provision?FAQs On New ProvisionConclusionYou May Also LikeGet Free Updates[Join WhatsApp Group] What is The New GST RCM Provision? The Government has introduced new GST RCM provision on payment of rent (for any property other then residential dwelling) by GST registered person to unregistered person vide Notification No. 09/2024- Central Tax (Rate) on October 8,…

[manimarank]

GST on Services Rendered by Company Directors: A Clarification on Reverse Charge Mechanism

Title: GST on Services Rendered by Company Directors: A Clarification on Reverse Charge Mechanism Introduction The Goods and Services Tax (GST) regime in India is a complex framework that seeks to tax the supply of goods and services across various sectors. Among the many intricacies of GST, the concept of Reverse Charge Mechanism (RCM) is vital, particularly when it comes to services provided…

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GST Consultant

What is GST and Why It Matters

Goods and Services Tax (GST), introduced on 1 July 2017, is India’s most significant indirect tax reform. It merged various state and central taxes like VAT, excise duty, and service tax into a single system, with the aim of simplifying compliance and fostering a unified market across India.

GST is essential for businesses because it:

Eliminates the cascading effect of taxes

Facilitates seamless input credit

Reduces complexities in inter-state transactions

Increases transparency and compliance

🧩 Applicability: Who Must Register?

GST registration is required in the following scenarios:

1. Mandatory Registration

Turnover exceeds ₹20 lakhs (₹10 lakhs for some states)

Inter-state supply of goods/services

Selling through e-commerce platforms

Casual taxable persons or non-resident suppliers

Businesses liable under the Reverse Charge Mechanism (RCM)

2. Voluntary Registration

Even if not mandatory, businesses often register for GST to gain credibility, avail Input Tax Credit (ITC), and expand operations smoothly.

🧭 Ruchi Anand & Associates’ GST Services

Ruchi Anand & Associates, a reputed Chartered Accountancy firm based in Delhi, offers complete GST solutions for businesses of all sizes. With over 20 years of experience in tax advisory and compliance, the firm ensures you stay updated and fully compliant with GST regulations.

Their specialized GST services include:

1. GST Applicability Analysis

Evaluation of registration requirements based on turnover and supply type

Sector-specific compliance needs

Support for e-commerce sellers and exporters

2. GST Registration

End-to-end assistance with GST portal registration

Amendment of registration details

Surrender or cancellation of GSTIN if business is closed

3. GST Return Filing

Timely filing of GSTR-1, GSTR-3B, GSTR-9, and GSTR-9C

Monthly and quarterly compliance management

Reconciliation of sales and purchase data

4. Input Tax Credit (ITC) Reconciliation

2A/2B vs purchase ledger reconciliation

Claim optimization and blockage review

Prevention of credit mismatches

5. GST Audit & Annual Return Filing

Audit support for businesses with turnover above ₹5 crores

Preparation of GSTR-9 and GSTR-9C

Advisory on corrective action for past non-compliance

6. GST Refunds

Assistance with refund applications for exporters, SEZ units, and inverted duty structures

Tracking and liaison with GST officers

7. GST Litigation & Representation

Drafting replies to GST notices and show cause notices

Representation before GST departments and appellate authorities

📋 Ruchi Anand & Associates: End-to-End GST Process

The firm simplifies the entire GST lifecycle:

Preliminary Assessment Review of turnover, supply types, business model

Document Collection PAN, Aadhaar, proof of business, bank statements, photos, and digital signatures

Online Registration Filing on GST portal with regular tracking

Post-Registration Compliance Invoicing format guidance, e-way bill integration, monthly returns setup

Ongoing Advisory Monthly reconciliation, ITC guidance, audit preparedness, and departmental updates

🔍 Why GST Registration is Critical

Registering under GST provides:

Legal recognition for your business

Input Tax Credit benefits on purchases

Nationwide market access

Participation in tenders, contracts, and schemes

Credibility with vendors and clients

🌟 Why Choose Ruchi Anand & Associates?

There are multiple reasons to trust Ruchi Anand & Associates for your GST needs:

✅ Decades of Experience

With over 20 years of expertise in taxation and financial compliance, the firm has helped hundreds of businesses from diverse industries, including IT, pharmaceuticals, construction, e-commerce, and manufacturing.

✅ Sector-Specific Solutions

Their GST solutions are tailored for:

Startups & MSMEs

Exporters & SEZ units

Charitable institutions

E-commerce vendors

Freelancers and professionals

✅ Strong Legal Support

The firm not only ensures compliance but also provides robust litigation support in case of GST notices, audits, or disputes. Their proactive advisory approach helps you avoid common pitfalls.

✅ Client-Centric Approach

Ruchi Anand & Associates is known for its transparency, responsiveness, and integrity. The team ensures clients are well-informed about due dates, legal amendments, and filing statuses.

💼 Beyond GST: A Holistic Compliance Partner

In addition to GST services, Ruchi Anand & Associates offers:

Company Formation & Start-up Services

Private Limited, LLP, NGO, Section 8 company registration

Startup India recognition, MSME registration

Income Tax Filing & Advisory

ITR filing for individuals, corporates, and NRIs

Tax planning and scrutiny support

TDS & Payroll Management

Monthly payroll, Form 16 issuance, TDS return filing

Accounting & Bookkeeping

Day-to-day accounting, virtual CFO, internal controls

Statutory & Internal Audits

Compliance audit, GST audit, stock audit, internal process reviews

📊 GST Return Filing Schedule at a Glance

Return TypeFrequencyApplicabilityGSTR-1Monthly/QuarterlyOutward suppliesGSTR-3BMonthlySummary return with tax paymentGSTR-9AnnuallyAnnual returnGSTR-9CAnnuallyAudit reconciliation (if turnover > ₹5 Cr)GSTR-4AnnuallyComposition scheme taxpayersGSTR-10One-timeFinal return upon cancellation

🔐 Importance of Accurate GST Compliance

Failing to comply with GST rules can lead to:

Interest @ 18% on late payment

Penalties for non-filing or delayed filing

Blocked Input Tax Credit

Notices and audits by GST officers

Litigation, including penalties under anti-profiteering clauses

By partnering with Ruchi Anand & Associates, you avoid these risks and ensure seamless compliance.

🚀 Testimonials from Clients

“RAAAS helped us migrate our business to the GST regime smoothly. Their regular guidance and prompt filing helped us avoid penalties.” — Amit Kumar, MSME Owner

“Their reconciliation support for ITC has saved us lakhs in lost credits. The team is prompt, knowledgeable, and always professional.” — Divya Sharma, CFO of a logistics company

📞 Get in Touch

If you're looking for a reliable GST consultant in India, Ruchi Anand & Associates is your trusted partner.

📧 Email: info@raaas.com 📞 Phone: +91-98115-68048 🌐 Website: www.raaas.com

🧾 Conclusion

GST compliance is not just about tax—it’s about building a legally sound, growth-ready business. With an experienced partner like Ruchi Anand & Associates, businesses benefit from strategic guidance, timely filings, and peace of mind.

Whether you’re a new business registering for GST or an established enterprise needing reconciliation and litigation support, RAAAS provides end-to-end solutions that let you focus on growth while they handle compliance.

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Expert GST Consultancy Services in India – Filing, Compliance & Advisory

Get professional GST consultancy services in India for accurate filing, compliance, audits, and business advisory. Trusted GST experts for startups, SMEs, and large enterprises.

GST Consultancy Services – Expert Guidance for Tax Compliance and Business Growth

In the dynamic landscape of Indian taxation, GST Consultancy Services have become a critical support system for businesses seeking clarity, compliance, and strategic planning. With the implementation of the Goods and Services Tax (GST), companies are now required to follow standardized tax rules across states, making expert advice more valuable than ever.

The complexity of GST laws, frequent updates, and digital filing processes often overwhelm even seasoned businesses. This is where professional GST Consultancy Services come into play—offering reliable, accurate, and customized solutions to ensure compliance and peace of mind.

🔹 Comprehensive GST Registration & Advisory

GST consultants assist businesses with end-to-end registration under the appropriate GST categories such as Regular, Composition, or Casual taxable persons. From documentation to filing applications and coordinating with GST departments, consultants ensure a smooth onboarding experience. Additionally, they provide strategic advice on tax planning, optimal structures, and compliance timelines.

🔹 Monthly GST Return Filing & Compliance

One of the most time-sensitive tasks under the GST regime is monthly return filing (GSTR-1, GSTR-3B, GSTR-9, etc.). GST consultancy services ensure timely and accurate return submissions, reconciliation of input and output tax, and management of mismatches. This helps businesses avoid late fees, penalties, and disruptions in Input Tax Credit (ITC).

Consultants also track changes in GST notifications, rules, and exemptions to keep clients informed and protected against non-compliance.

🔹 GST Audit and Representation

Every business with a turnover exceeding the threshold must undergo a GST audit. GST consultants prepare and review audit reports, identify discrepancies, and assist in resolving tax notices. They also provide legal representation in case of departmental inquiries, assessments, or appeals before tax authorities, ensuring complete peace of mind.

Having a reliable consultancy ensures that your audit trail is clean, justified, and defensible.

🔹 Sector-Specific GST Solutions

Different sectors—such as logistics, manufacturing, e-commerce, and exports—face unique GST challenges. GST consultancy firms offer tailored solutions by understanding industry-specific tax structures, exemptions, and invoicing rules. This includes services like HSN/SAC code classification, reverse charge mechanism (RCM) compliance, and export refund management.

Specialized advice helps optimize tax burdens while staying fully compliant with applicable laws.

✅ Why Choose Professional GST Consultancy Services?

Expertise & Accuracy: Stay updated with the latest GST rules and frameworks

Time & Cost Savings: Avoid penalties and inefficient processes

Custom Reports & Insights: Get reports on ITC utilization, liabilities, and compliance scores

Dedicated Support: Enjoy personalized assistance for audits, disputes, and notices

Whether you're a startup, SME, or established enterprise, partnering with a trusted GST consultant can significantly reduce compliance risks and streamline your operations.

[indrealty]

A major change in GST compliance is represented by the Reverse Charge Mechanisms (RCM) expansion to include commercial property rentals by unregistered individuals. Tenants who rent from unregistered property owners will be required to pay GST starting on October 10 2024 guaranteeing increased tax inclusion and better revenue collection.

[aicountly]

GST Accounting: Recording & Reporting GST Transaction

By substituting a uniform framework for several flowing taxes, the Goods and Services Tax (GST) adopted in 2017 transformed India's indirect tax structure. For companies, two pillars—accurate transaction recording and timely tax authority reporting—define GST compliance. Both can result in penalties, rejected input tax credits (ITC), or audits from mistakes in either. This blog demystifies GST accounting and provides doable advice on how to accurately document purchases and confidently complete returns.

What is GST Accounting?

GST accounting involves managing GST transaction financial records. GST is a total indirect tax on Indian products and services. GST accounting aims to ensure enterprises accurately document their GST responsibilities and claim qualifying input tax credits. GST accounting requires precise sales and purchase records due to tax paid on delivery and input tax credits. Companies must file GST reports regularly to comply with laws. Good GST accounting ensures compliance, transparency, and avoids fines.

GST Structure in India

Before diving into accounting, grasp the three components of GST:

CGST (Central GST): Collected by the Central Government on intra-state sales.

SGST (State GST): Gathered on intra-state sales by the state government.

IGST (Integrated GST): Collected by the Central Government on inter-state sales and imports.

Recording GST Transactions: A Structured Approach

Compliance depends mostly on accurate documentation of GST transactions to guarantee smooth input tax credit (ITC) claims and reduce audit risks. Adhering to the dual tax system (CGST/SGST for intra-state transactions and IGST for inter-state transactions), companies in India must separately consider GST for sales, purchases, and adjustments. Here's how to methodically document these exchanges:

Sales Transactions Businesses have to consider both CGST and SGST for intra-state sales—where products or services are provided inside the same state. If a Maharashtra-based firm sells items valued ₹10,000 with an 18% GST rate (9% CGST + 9% SGST), for example, the total invoice value becomes ₹11,800. The accounts in the books show separate liability accounts for CGST (₹900) and SGST (₹900) and debited with ₹11,800 while Sales Revenue is credited with ₹10,000. IGST follows for inter-state sales. Imagine the same corporation selling a buyer in Karnataka items valued ₹10,000. The invoice for an 18% IGST comes out to be ₹11,800. Accounts Receivable is debited ₹11,800 here; Sales Revenue is credited ₹10,000; the IGST Liability account is credited ₹1,800.

Purchase Transactions When registering intra-state purchases—that is, purchases of raw goods costing ₹5,000 with 18% GST (9% CGST + 9% SGST)—the Purchases account is debited with ₹5,000. Reflecting the tax credit accessible, the CGST and SGST Input Tax Credit (ITC) accounts are debited with ₹450 each simultaneously; accounts payable is credited with the total due sum of ₹5,900. For inter-state purchases—such as purchasing machinery valued ₹1,00,000 with 18% IGST—the Machinery account is debited with ₹1,00,000 and the IGST ITC account is debited with ₹18,000, the claimable credit. Then accounts payable credit ₹1,18,000.

Special Scenarios The Reverse Charge Mechanism (RCM) applies when the buyer is liable to pay GST, such as for imported services. For example, if a business procures ₹50,000 worth of services under RCM with 18% IGST, the Service Expense account is debited with ₹50,000, and the IGST Liability account is credited with ₹9,000. If eligible, the IGST ITC account is debited with ₹9,000, offsetting the liability.

Adjustments like credit notes (for sales returns) and debit notes (for additional charges) must also be recorded. A credit note reducing sales by ₹1,800 would involve debiting CGST and SGST liability accounts by ₹900 each and crediting Accounts Receivable. Conversely, a debit note increasing liability would debit Accounts Receivable and credit the respective GST accounts.

By structuring entries this way, businesses maintain clarity on tax liabilities, ITC eligibility, and compliance with India’s GST framework.

Maintaining GST Ledgers

For the purpose of tracking GST liabilities and ITC, monitor these ledgers:

Output GST ledger is used to track all the GST accumulated on sales.

Input GST ledger assist in recording of GST paid on purchases.

The electronic cash ledger is used to record GST payments that are settled in cash.

The electronic credit ledger shows the availability of ITC on hand for adjusting liabilities.

Reporting GST Transactions: Filing Returns

The subsequent GST returns are essential for businesses to submit in order to maintain compliance: -

GSTR-1: All normal and casual registered taxpayers making outward supply of goods and services or both must file Form GSTR-1 monthly/quarterly.

GSTR-2A/2B: When suppliers upload invoices, GSTR 2A updates. In contrast, GSTR 2B is a static statement that lists the input tax credit for a return period. GSTR 2B identifies input tax credit-eligible bills.

GSTR-3B: Monthly GSTR-3B self-declared summary GST returns (quarterly for QRMP) are filed. GSTR-3B requires sales, ITC, and net tax summary statistics. Every GSTIN needs a GSTR-3B.

GSTR-9: GST return GSTR-9 is due by December 31 of the year after the financial year. GSTR-9 reports sales, purchases, and GST paid and levied during the year. GST taxpayers with yearly turnovers exceeding Rs. 2 crores must submit GSTR-9.

GSTR-9C: Taxpayers file GSTR-9C for yearly GST reconciliation. All registered persons with annual turnovers exceeding Rs. 5 crores must complete this form. They must also provide audited yearly accounts.

Use these guidelines to guarantee correct and timely GST returns' filing:

Match purchase invoices with supplier-filed GSTR-1 to reconcile books using GSTR-2A/2B, then close disparities before submitting GSTR-3B.

Prepare GSTR-1 by submitting invoice-wise sales data including HSN codes, taxable value, GST rates, debit/credit notes and export details.

Declaring total sales, qualifying ITC, net tax payable (after balancing ITC), and pay any leftover tax using the computerized cash/credit ledger, file GSTR-3B.

Common Pitfalls & Solutions

These are some typical mistakes in GST filings together with fixes to assist prevent compliance problems.

Supplier delays in GSTR-1 cause mismatched ITC; address by following up with suppliers and carefully applying temporary ITC.

Using old or incorrect codes results in incorrect HSN codes; they are resolved by consulting the most recent HSN/SAC list from the GST Council.

Missed GSTR-3B deadlines cause late filing fines; fix by automating submissions and creating calendar reminders.

Best Practices for GST Accounting

These recommended practices can help you guarantee correct GST accounting and seamless compliance:

Before submitting GSTR-3B, reconcile monthly by comparing books with GSTR-2A/2B.

Store payment receipts, e-way bills, and invoices for six years.

Give accounts teams frequent GST update training including e-invoicing and the QRMP system.

Do quarterly internal audits to find areas lacking compliance.

Questions to Understand your ability

What is the primary purpose of GST accounting in India?

A) To determine the income tax liabilities B) To manage GST transactions and claim eligible input tax credits (ITC) C) To monitor sales revenue only D) To calculate employee salaries

Answer: B) To manage GST transactions and claim eligible input tax credits (ITC) Explanation: GST accounting focuses on accurately documenting sales, purchases, and ensuring the proper claim of eligible input tax credits (ITC).

In the case of intra-state sales, how is GST split between CGST and SGST?

A) 50% CGST, 50% SGST B) 9% CGST, 9% SGST C) 18% CGST, 18% SGST D) 10% CGST, 10% SGST

Answer: B) 9% CGST, 9% SGST Explanation: For intra-state sales, the GST is typically split evenly between CGST and SGST (for example, 9% each in the case of an 18% GST rate).

What should a business do if there is a mismatch in the input tax credit (ITC) due to delays in the supplier's GSTR-1 filing?

A) Accept the delay without any action B) Automatically apply temporary ITC and wait C) Follow up with the supplier to resolve the mismatch D) File the return without adjusting the ITC

Answer: C) Follow up with the supplier to resolve the mismatch Explanation: If there is a delay in the supplier's GSTR-1 filing, the business should follow up to ensure that the ITC is correctly matched and applied before filing.

Which GST return is required for taxpayers to report annual sales, purchases, and GST paid during the year?

A) GSTR-1 B) GSTR-3B C) GSTR-9 D) GSTR-2A

Answer: C) GSTR-9 Explanation: GSTR-9 is an annual return filed to report sales, purchases, and GST paid during the year, and it is due by December 31 of the following year.

What is the function of the "electronic credit ledger" in GST accounting?

A) To track GST payments settled in cash B) To store sales invoices C) To record the availability of Input Tax Credit (ITC) for offsetting GST liabilities D) To monitor the status of GSTR-3B filings

Answer: C) To record the availability of Input Tax Credit (ITC) for offsetting GST liabilities Explanation: The electronic credit ledger records the available ITC; which businesses can use to offset their GST liabilities.

Conclusion

Learning GST accounting calls both careful record-keeping and proactive reconciliation as well as technological use. Businesses may minimize fines and maximize cash flow through smooth ITC claims by precisely documenting transactions in ledgers, matching data with GST forms, and timely submission. Long-term compliance and operational efficiency depend on being informed and implementing automation as GST rules develop.

[fairmoves]

How Does GST Audit Advisor in Chennai Prevent Filing Errors?

If you run a business, you already know how important it is to stay on top of financial regulations. But one area that often creates confusion is GST filing. Dealing with GST returns can feel like walking through a maze, especially when you’re trying to do everything right to avoid penalties. Whether you’re a small business owner or an investor trying to maintain clean books. This is why more and more businesses are opting for GST filing services in Chennai to stay worry-free. Having expert support means fewer errors and better compliance.

But even if you're getting help, understanding the basics and common mistakes in GST filing can give you a clearer view of your financials. In this article, we’ll walk you through the most common errors people make while filing GST returns and how to avoid them.

1.  Manual Data Entry Errors

Let’s face it: Typing numbers manually always leaves room for mistakes. A small typo in GSTIN, invoice amount, or date can create major problems. These errors can trigger notices or rejections during audits. Always double-check your entries or use digital accounting tools to reduce the chances of these errors.

2.  Confusion with Tax Slabs

Every product or service is taxed under a specific GST slab. If you don’t apply the correct rate, it can lead to underpayment or overpayment of tax. This can result in a mismatch when the department cross-verifies your returns, leading to delays or penalties. Always refer to the HSN (Harmonised System of Nomenclature) codes and GST slab list before filing.

3.  Skipping NIL Returns

Just because you didn’t make any sales in a particular month doesn’t mean you can skip the GST return. Many investors and startups make this mistake. You must file a NIL return to stay compliant, even when there’s no activity. Ignoring this can attract fines and freeze your GSTIN.

4.  Zero-Rated vs Nil-Rated Confusion

Zero-rated supplies (like exports) and nil-rated supplies (like certain essential goods) are not the same. Be sure to understand this distinction clearly before filing your returns.

If you find these processes overwhelming, it might be time to get help from a GST Audit advisor in Chennai. They can help review your filing practices and make sure you're not missing anything important.

5.  Incorrect Reverse Charge Filing

Some transactions fall under the Reverse Charge Mechanism (RCM), where the buyer pays the GST instead of the seller. Failing to identify and declare these transactions correctly can lead to interest and penalties. Always check whether a transaction falls under RCM and file it accordingly.

6.  Misclassification under GST Heads

Many businesses end up paying GST under the wrong tax heads — CGST, SGST, or IGST. This mistake can affect your returns and lead to notices or demands from the tax department. Knowing which tax head applies to each transaction type is key to staying compliant.

7.  Documentation and Bookkeeping Gaps

Maintaining clean and organized records is a must. Inadequate documentation can make audits a nightmare. Make sure to save every invoice, payment proof, and ledger detail. Good documentation helps not just during audits but also while claiming ITC and preparing financial reports.

Conclusion

Whether you're a business owner or an investor, understanding the basics of GST compliance is crucial. It’s not just about avoiding fines, it’s also about building trust, keeping your operations smooth, and staying stress-free during audits. A little help can go a long way for your business or investment portfolio to grow without unnecessary hiccups.

[gstservices]

Understanding Reverse Charge Mechanism in GST: 2025 Updates

The Goods and Services Tax (GST) includes the Reverse Charge Mechanism (RCM) as a fundamental component of indirect taxation that continues to be essential for India. Businesses operating in 2025 need to monitor the most recent GST reverse charge compliance requirements along with its application scope and implications toward financial operations. This platform presents contemporary information about the GST reverse charge mechanism which features new guidelines for compliance processes alongside specific updates for different businesses sectors.

What is Reverse Charge Mechanism in GST?

Under GST, the reverse charge mechanism allows purchasers to directly bear the tax responsibility for their transactions. The recipient becomes responsible for GST tax obligations under the RCM system because they determine the payable taxes before remitting them at face value while also claiming ITC benefits. The method exists to confirm tax adherence when suppliers carry exemptions or non-registration or belong to declared government categories.

How Does Reverse Charge Work in GST?

All businesses need to perform the following three actions under GST reverse-charge rules:

Determine all business scenarios requiring Reverse Charge Mechanism under GST.

Firms should compute and send GST payments to the governmental system directly.

All businesses should retain compliance records to apply for input tax credit benefits.

All transactions subject to the GST reverse charge requirement need reporting in monthly return documents.

Tax revenues are collected under RCM under GST from businesses making transactions with unregistered suppliers while raising their compliance requirements.

Reverse Charge Mechanism Applicability in India (2025 Updates)

The applicability of the reverse charge mechanism in India continues to evolve with changing tax regulations. As of 2025, the following categories remain subject to the GST reverse charge on services and goods:

 1. Government-Notified Goods and Services

The government now includes more services under the scope of reverse charge tax application. Some notable categories include:

The provision of legal services through an advocate comes under the reverse charge tax requirements.

Transportation of goods by GTA (Goods Transport Agency). A company could previously deduct services received from its director before the implementation of the GST Act.

Digital service providers operating from outside India serving Indian consumers.

E-commerce operators for certain transactions (as per 2025 amendments).

2. Transactions from Unregistered to Registered Dealers

If a registered dealer purchases from an unregistered supplier, the registered recipient must pay GST liability under RCM applicability. This rule has been extended in 2025 to include:

Certain imports where tax is now collected under RCM.

Services provided by freelancers and gig workers above a specific turnover threshold.

Who is Liable to Pay Tax Under Reverse Charge?

Under RCM under GST, the recipient of goods or services must pay the tax directly to the government. This ensures tax compliance even when suppliers are not registered or fall within specific exemption categories.

GST Reverse Charge on Services and Goods: 2025 Examples

Services Covered Under RCM

Legal & professional services provided by advocates, chartered accountants, and consultants.

E-commerce services, where platforms facilitate transactions for unregistered suppliers.

Import of services, including software subscriptions and cloud services from international providers.

Goods Covered Under RCM

Raw materials purchased from unregistered suppliers.

Scrap & waste materials, where collection agencies operate outside the GST registration framework.

Agricultural products, where tax liabilities are assigned to large buyers.

RCM vs Forward Charge in GST (2025 Updates)

Aspect

Reverse Charge Mechanism (RCM)

Forward Charge Mechanism

Tax Liability

Paid by the recipient

Paid by the supplier

Invoice Issuance

Recipient generates self-invoice

Supplier issues invoice

ITC Claim

Allowed after tax payment

Allowed immediately

Compliance Requirement

More stringent

Less complex

GST Reverse Charge Compliance Requirements in 2025

Businesses liable for GST reverse charge compliance requirements must:

Pay GST on applicable transactions as per the updated rates.

Issue self-invoices for RCM transactions.

Report RCM under GST in monthly GST returns (GSTR-1 & GSTR-3B).

Maintain digital records as per the new compliance standards.

Ensure the automated reconciliation of RCM payments within GST filings.

Non-compliance with RCM applicability can lead to higher penalties and stricter audits, as per the revised GST laws in 2025.

How to Claim ITC on Reverse Charge in GST?

A major advantage of GST reverse charge is the ability to claim ITC on reverse charge in GST. The steps to claim ITC remain:

Pay GST liability under RCM.

Record the transaction in GSTR-3B.

Claim input tax credit in the next eligible return.

Ensure invoice matching for faster claim approval.

In 2025, the government has introduced automated verification for input tax credit claims, thus reducing processing delays and minimizing errors.

Latest Updates on Reverse Charge Mechanism in GST (2025)

The RCM system includes new services which now includes some digital services and select operations from the gig economy.

A system exists for automated verification of RCM payments within GST filing applications.

Even greater financial consequences are imposed on those who fail to adhere to RCM self-invoicing requirements; however, it's important to note that not all RCM transactions require self-invoicing—this typically applies only to transactions with unregistered suppliers.

E-commerce operators are liable for RCM payments only when facilitating specific services, such as transportation; it's important to note that this liability does not apply to all services.

The ITC claim process under RCM remains complex, especially with increased scrutiny, contrary to the misleading impression of it being simplified.

Impact of RCM on Businesses

Advantages:

Ensures tax compliance for transactions involving unregistered suppliers.

Allows businesses to claim input tax credit effectively.

Reduces tax evasion and increases government revenue.

Improved automation in compliance, reducing manual errors.

Challenges:

Increased GST compliance burden, requiring digital record-keeping.

Need for accurate reporting to avoid penalties.

Cash flow constraints due to upfront tax payments under RCM.

Conclusion

Businesses need to stay aware of the recent developments regarding the GST reverse charge mechanism in 2025. The understanding of how reverse charge works under GST leads businesses to establish effective tax planning systems through accurate reporting and maximize their potential for input tax deductions. Businesses that follow GST reverse charge compliance rules can both handle their tax responsibilities effectively and prevent tax penalties.

Businesses that maintain knowledge about GST reverse charge mechanism differences with forward charge methods alongside best practices for GST application will achieve better indirect tax management in the Indian market of 2025.

Recent 2025 updates under GST include a reduced e-invoicing threshold of ₹1 crore and mandatory e-invoicing for credit notes. RCM changes include a refund mechanism for excess payments, adjusted liability options, and updated rules for services like commercial rent and scrap dealing.

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GST for Online Business and E-commerce: A Step-by-Step Guide

E-commerce and online businesses have totally transformed the global economy. Entrepreneurship is made easy now since it is much simpler for entrepreneurs to sell goods and services across geographical boundaries. But ease brings along with it the problem of compliance, particularly in the case of the Goods and Services Tax (GST). In this blog post, we will look at how GST has impacted e-commerce and online businesses, main compliance requirements, and how businesses can remain compliant while also obtaining maximum returns.

GST for E-commerce Businesses

GST is an indirect tax that is imposed on the supply of goods and services. It consolidates various indirect taxes such as VAT, service tax, and excise duty into one uniform tax system. E-commerce companies are governed by certain provisions of the GST Act, hence it is critical for online sellers, marketplaces, and service providers to know their tax liability.

Who Have to Get Registered Under GST in E-commerce?

E-commerce Operators (Marketplaces): Marketplaces in e-commerce such as Amazon, Flipkart, and Shopify who process sales on sellers' behalf must follow GST law.

Online Sellers & Vendors: Companies which sell products or services online either through third-party marketplaces or their own web pages are necessary to get registered for GST without regard to turnover.

Dropshipping Businesses: Those businesses running dropshipping models need to be GST compliant too, if they sell taxable goods or services.

Freelancers & Digital Service Providers: Freelancers offering digital services like graphic designing, content writing, programming, or consulting services through digital platforms need to get GST registered, if their turnover exceeds the threshold limit.

GST Registration Threshold for E-commerce Businesses

Unlike regular business units, GST registration is required only when turnover exceeds ₹40 lakhs for goods and ₹20 lakhs for services (₹10 lakhs for special category states), while e-commerce vendors have to mandatorily register under GST irrespective of turnover under Section 24 of the CGST Act.

Tax Collected at Source (TCS)

E-commerce operators (marketplaces) need to collect 1% TCS (0.5% CGST + 0.5% SGST or 1% IGST) from the sellers on the platform. The amount is withheld while paying sellers and has to be remitted to the government.

GST Return Filing

E-commerce companies need to file GST returns from time to time, depending upon their registration type:

GSTR-1: Quarterly or monthly return of outward supplies (sales).

GSTR-3B: Combined monthly tax liability return.

GSTR-8: Filed by e-commerce operators reporting TCS collected.

Place of Supply & GST Applicability

Place of supply plays an important role in identifying whether CGST, SGST, or IGST applies. For e-commerce transactions:

Intra-state sales (seller and buyer within the same state) attract CGST + SGST.

Inter-state sales (seller and buyer in different states) attract IGST.

Exports are considered zero-rated supplies, and firms are entitled to recover refund of GST paid on inputs.

Reverse Charge Mechanism (RCM)

E-commerce firms need to understand RCM, where the purchaser is required to pay GST in lieu of the supplier in certain situations (i.e., obtaining services from unregistered persons).

GST Benefits & Problems for E-commerce Firms

Benefits:

✅ Uncomplicated Tax Structure: GST is a change from several indirect taxes, making compliance less complex.

✅ Input Tax Credit (ITC): Enterprises can take credit of GST paid on procurement.

✅ Ease of Doing Business: Easy inter-state business due to GST.

✅ Promotes Compliance: Compulsory registration helps ensure transparency.

Concerns:

❌ Mandatory Registration: Small online vendors too must register, thereby enhancing cost of compliance.

❌ Different Return Filing: Multiple GST returns complicate the job of small sellers.

❌ Cash Flow Problems: TCS deduction impacts suppliers' working capital.

How Online Businesses Can Remain Compliant

Register GST Timely: Avail GST registration before initiating an online business.

Keep Proper Invoices & Documents: Provide invoices with GST compliance and keep procurement records.

Submit Returns Timely: Avoid charges by following the due dates of GST returns.

Be Aware of TCS & RCM: Be aware of deductions and liability that apply.

Claim Input Tax Credit: Record GST paid while procuring to minimize tax outgo.

Conclusion

GST compliance is required for online and e-commerce businesses in India. While it brings about challenges such as compulsory registration and TCS deductions, it also offers advantages such as uniformity of tax and input tax credit. If e-commerce companies learn about GST rules and adopt best practices, they can stay compliant while growing their business economically.

For expert assistance with GST registration and filing, consider consulting a tax professional or using online tax compliance tools. Staying informed and proactive can help businesses navigate GST complexities effectively!

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GST Registration Made Easy: Step-by-Step Guide for Indian Businesses

The Goods and Services Tax (GST) is a unified indirect tax system in India that replaces multiple state and central taxes. Businesses and individuals supplying goods and services must register for GST if their turnover exceeds the prescribed threshold.

This guide provides a step-by-step process for GST registration in India, including eligibility, required documents, and benefits. For a hassle-free registration, consider seeking assistance from a professional GST Registration Agency.

What is GST Registration?

GST registration is a legal requirement for businesses exceeding turnover limits or engaged in specific business activities. Upon registration, a business receives a GST Identification Number (GSTIN), crucial for tax compliance and filing returns. Operating without GST registration can result in penalties and legal actions.

Who Needs GST Registration?

Mandatory GST Registration Criteria:

As per GST regulations, the following businesses and individuals must register:

Turnover-Based Registration:

Service providers: Annual turnover above ₹20 lakhs (₹10 lakhs for special category states)

Goods suppliers: Annual turnover above ₹40 lakhs (₹20 lakhs for special category states)

Interstate Business Operators:

Businesses supplying goods/services across state borders must register, regardless of turnover.

E-commerce Sellers:

Businesses selling via platforms like Amazon, Flipkart, etc., must register.

Casual Taxable Persons:

Individuals involved in seasonal or temporary business activities.

Non-Resident Taxable Persons:

Foreign businesses providing goods or services in India.

Agents & Input Service Distributors:

Businesses distributing tax credits.

Reverse Charge Mechanism (RCM) Entities:

Entities liable to pay GST under RCM.

Voluntary Registration:

Small businesses can register voluntarily to avail of tax benefits and business credibility.

Documents Required for GST Registration

To apply for GST registration, the following documents are needed:

PAN Card (Business/Proprietor)

Aadhaar Card (For verification)

Business Address Proof (Utility bill, rental agreement, or property tax receipt)

Bank Account Details (Cancelled cheque or bank statement)

Incorporation Certificate/Partnership Deed (For companies and partnerships)

Digital Signature Certificate (DSC) (For companies and LLPs)

Authorization Letter (If applicable)

Photographs of Proprietor/Partners/Directors

Step-by-Step Guide to GST Registration

Follow these steps to complete GST registration online:

Visit the GST Portal

Go to the official GST portal.

Click on ‘Register Now’

Navigate to ‘Services > Registration > New Registration’.

Fill in Basic Details

Enter details like business type, PAN, state, district, email, and mobile number.

OTP Verification

An OTP is sent to the registered email and mobile number for verification.

Receive Temporary Reference Number (TRN)

A TRN is generated upon verification for future login.

Complete Business Details

Log in using the TRN and provide details like business structure, address, and bank information.

Upload Required Documents

Submit necessary documents including PAN, Aadhaar, and bank proof.

Verification & Submission

Review and submit the application using DSC, E-Sign, or EVC.

Application Reference Number (ARN) Generation

After submission, an ARN is sent via email and SMS.

GST Officer Review & Approval

The application is reviewed, and upon approval, the GSTIN is issued within 7–10 working days.

Benefits of GST Registration

Legal Recognition: Establishes your business as a tax-compliant entity.

Input Tax Credit (ITC): Allows businesses to claim tax credits.

Seamless Inter-State Trade: Enables smooth transactions across states.

Enhanced Business Credibility: Increases trust among clients and partners.

Competitive Edge: Essential for government tenders and large contracts.

Common Challenges & Solutions

Incorrect Document Submission: Ensure all documents are uploaded correctly.

Verification Delays: Track ARN status and follow up if required.

Errors in Application: Double-check details before submission.

Choosing the Right GST Category: Consult professionals for proper guidance.

Why Choose a Professional GST Registration Agency?

Navigating GST registration can be complex, especially for new businesses. Partnering with a GST Registration Agency ensures:

Hassle-free filing

Accurate documentation

Quick processing and GSTIN issuance

Expert tax compliance support

Conclusion

GST registration is a vital step for businesses operating in India. Understanding the process and requirements ensures smooth compliance and business growth. For a seamless experience, seeking expert assistance can save time and effort.

For professional GST registration services, visit Tax and Services or call us at 7316967017 and get started today!

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Best Taxation Services In Australia- Accomate Australia

Common Tax Mistakes Businesses Make & How to Avoid Them

Managing taxes is a crucial part of running a business, but many businesses, including those in the travel industry, often make common tax mistakes that can lead to penalties and financial losses. Understanding these pitfalls and taking proactive steps to avoid them can save businesses from unnecessary stress and expenses. Here are some of the most common tax mistakes businesses make and how to avoid them.

1. Incorrect GST Filing

Many businesses either fail to register for GST on time or make errors in filing their GST returns. This can result in penalties and loss of input tax credits. How to Avoid: Ensure timely registration and proper record-keeping of invoices to file accurate GST returns. Using accounting software can simplify this process.

2. Ignoring Tax Deductions

Businesses often miss out on claiming deductions such as travel expenses, office rent, and employee salaries, leading to higher tax liabilities. How to Avoid: Maintain proper records of all expenses and consult a tax professional to identify applicable deductions.

3. Late Tax Payments

Delaying tax payments can lead to penalties and interest charges, increasing the overall tax burden. How to Avoid: Set reminders and automate tax payments to ensure timely compliance.

4. Misclassifying Employees and Contractors

Many businesses misclassify employees as independent contractors, which can lead to legal and tax implications. How to Avoid: Understand the legal differences between employees and contractors and classify them correctly based on government regulations.

5. Not Reconciling Bank Statements

Failing to reconcile bank statements with financial records can result in discrepancies that may lead to tax audits. How to Avoid: Regularly reconcile bank statements to ensure accuracy in financial reporting.

6. Neglecting Compliance with Changing Tax Laws

Tax laws and regulations frequently change, and businesses that fail to stay updated may face compliance issues. How to Avoid: Keep track of tax law updates or hire a tax consultant to ensure compliance with the latest regulations.

7. Failing to Maintain Proper Documentation

Incomplete or missing records can lead to difficulties during tax assessments and audits. How to Avoid: Maintain well-organized financial records, including invoices, receipts, and tax returns, for at least five years.

8. Overlooking GST on Reverse Charge Mechanism (RCM)

Certain services fall under the reverse charge mechanism, where the recipient is liable to pay GST. Many businesses fail to account for this. How to Avoid: Identify transactions under RCM and ensure proper GST payment and reporting.

9. Not Seeking Professional Help

Many businesses try to manage taxes on their own without professional assistance, which can lead to costly errors. How to Avoid: Consult a tax professional or hire an accountant to ensure accurate tax filing and compliance.

By avoiding these common tax mistakes, businesses can ensure smooth financial operations and compliance with tax laws. Whether you’re a startup or an established company, staying proactive with tax planning is crucial for long-term success.

For more assistance with business financials and compliance, visit Australia Accomate.

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GST RCM on Rent

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What is the GST limit for small business?

Goods and Services Tax (GST) is a mandatory tax system in India, applicable to businesses based on their annual turnover. However, small businesses enjoy a threshold exemption limit, allowing them to operate without GST registration in Coimbatore if their revenue falls below a certain level. With online GST registration in Coimbatore, small businesses can easily comply with tax regulations if required.

GST Exemption Limit for Small Businesses

The GST registration limit varies based on business type and location.

1. For Goods Suppliers (Traders & Manufacturers)

₹40 lakh – If operating in regular states like Tamil Nadu, Karnataka, Maharashtra, etc.

₹20 lakh – If located in special category states like Himachal Pradesh, Uttarakhand, and the North-Eastern states.

2. For Service Providers

₹20 lakh – For businesses in normal states.

₹10 lakh – For businesses in special category states.

If a business’s annual turnover remains below these thresholds, GST registration in Coimbatore online is not mandatory unless it falls under specific GST requirements.

Who Must Register for GST Regardless of Turnover?

Even if a business is below the GST exemption limit, certain businesses must register for GST under specific conditions:

Interstate Business Transactions

Businesses supplying goods or services across state borders must register under GST, regardless of turnover.

E-commerce Sellers

Businesses selling on platforms like Amazon, Flipkart, or their own e-commerce websites must register for GST.

Casual Taxable Persons

Individuals who occasionally supply goods or services in different states must obtain GST registration.

Businesses Under Reverse Charge Mechanism (RCM)

If a business falls under RCM, where the recipient must pay GST instead of the supplier, GST registration is required.

Voluntary GST Registration

Small businesses may opt for online GST registration in Coimbatore voluntarily to avail of input tax credit benefits and gain credibility.

Composition Scheme for Small Businesses

The Composition Scheme allows small businesses to pay GST at a lower fixed rate without filing monthly returns. It is beneficial for businesses with turnover:

₹1.5 crore or below for goods suppliers (₹75 lakh for special category states).

₹50 lakh or below for service providers.

Under this scheme:

Traders & manufacturers pay 1% GST

Restaurants pay 5% GST

Service providers pay 6% GST

However, businesses in the Composition Scheme cannot claim input tax credit (ITC).

Conclusion

The GST registration limit for small businesses depends on their turnover and type of business. While businesses below ₹40 lakh (for goods) and ₹20 lakh (for services) are generally exempt, those involved in interstate trade, e-commerce, or RCM must register. With GST registration in Coimbatore online, small businesses can easily comply with GST rules and operate legally. If unsure, consulting experts for GST registration in Coimbatore can ensure hassle-free compliance.

[kaurdeepmehak]

Tally prime with advance gst

Tally Prime with Advanced GST is a powerful business management software that fully integrates GST compliance features, automating complex tasks like tax calculations, return filing, and data reconciliation. This ensures businesses meet all GST requirements without hassle. It simplifies the process of creating GST-compliant invoices, allowing automatic calculation of CGST, SGST, and IGST based on transaction types, and generates detailed sales and purchase reports. The software supports multiple GSTNs, helping businesses manage GST filings across different states, and also handles Reverse Charge Mechanism (RCM) transactions seamlessly.