Reverse charge transactions: accounting and reporting

Example: GTA freight ₹20,000 under RCM at 5%

1. Record the purchase and the RCM liability

Freight Inward A/c              Dr  20,000
    To Transporter A/c                  20,000
Input IGST (RCM) A/c            Dr   1,000
    To RCM IGST Payable A/c              1,000

2. Pay the RCM tax in cash through the GST portal (it can't be paid from ITC):

RCM IGST Payable A/c            Dr   1,000
    To Bank A/c                          1,000

3. Claim the ITC in the same month's GSTR-3B (if eligible).

Documents

• Supplier's invoice showing "tax payable on reverse charge".
• If the supplier is unregistered (e.g. rent from an unregistered landlord for commercial property): issue a self-invoice and a payment voucher.

GSTR-3B

• Liability: Table 3.1(d).
• Credit: Table 4A(3) (import of services: 4A(2)).

In Hisab Central

Set Reverse Charge = Yes on the purchase and set the RCM Payable ledger in Configuration (F12). See the GST Guide chapter Reverse Charge for the list of RCM services.

Sources

• Services notified under reverse charge, section 9(3)