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For businessesRates reviewed September 2026

Reverse Charge Mechanism Calculator for GST

Reverse charge flips the ordinary rule that the supplier collects GST and pays it over. On a notified supply the recipient pays the tax directly to the government, and the supplier bills a bare amount with no tax on the face of the invoice. The mechanism exists where the supplier base is small, informal or outside India, and collecting from thousands of individual advocates or transporters would be impractical.

Two things surprise businesses the first time. The tax has to be paid in cash even where the business is sitting on a mountain of unused input tax credit, because section 2(82) excludes reverse charge tax from the definition of output tax and section 49(4) lets the credit ledger touch nothing else. And where the supplier is unregistered, the recipient has to raise a self-invoice, which Rule 47A now requires within thirty days of receiving the supply.

The credit position is more forgiving than the cash position. Where the inward supply feeds taxable output, the tax paid under reverse charge is claimable as input tax credit in the same GSTR-3B in which it is paid, so the arrangement is cash flow rather than cost. Where the supply feeds exempt output or is blocked under section 17(5), the tax sticks, and the real price of the purchase is the invoice value plus the reverse charge.

Liability under reverse charge also makes registration compulsory under section 24 regardless of turnover, and a composition dealer is not exempt: it pays reverse charge at the ordinary rate on top of its composition amount.

Reverse Charge Calculator

The notified categories sit in notification 13/2017-Central Tax (Rate) for services and 4/2017 for goods.

The value on the supplier's bill, which carries no GST because you are the one liable.

₹
%
Recipient is eligible for full input tax credit

Turn this off where the inward supply feeds exempt output or is blocked under section 17(5).

Reverse charge tax payable in cash

₹18,000

credit of ₹18,000 comes back, so the net cost is ₹0

Taxable value
₹1,00,000
Rate appliedthe rate ordinarily notified for this category
18%
CGST (9%)
₹9,000
SGST (9%)
₹9,000
Tax payable under reverse chargeself-invoice the supply under section 31(3)(f) where the supplier is unregistered
₹18,000
Payable in cashreverse charge tax is not output tax under section 2(82), so section 49(4) blocks the credit ledger
₹18,000
Input tax credit availableclaimable once the tax has been paid, in the same GSTR-3B
₹18,000
Net tax cost after creditthe charge is cash flow only, not a cost
₹0
All-in cost of the purchasetaxable value plus any tax that does not come back
₹1,00,000
  • Reverse charge tax is paid in Table 3.1(d) of GSTR-3B and the credit is claimed in Table 4(A)(3) of the same return, so the cash goes out one month and the credit lands the same month.
  • Rule 47A gives you thirty days from the date of receipt of the supply to raise the self-invoice where the supplier is unregistered.
  • Liability under reverse charge makes registration compulsory under section 24 regardless of turnover, and a composition dealer pays it at the ordinary rate rather than the composition rate.

The formula

Reverse charge tax = Taxable value × Rate ÷ 100; Cash payable = Reverse charge tax; Net cost = Reverse charge tax - Eligible input tax credit

Taxable value
The value on the supplier's bill, which carries no GST because the recipient is the person liable.
Cash payable
The whole reverse charge amount, since the electronic credit ledger cannot be used against it.
Eligible input tax credit
The part of the reverse charge that comes back where the inward supply feeds taxable output.
Net cost
What the reverse charge actually costs once the credit is taken, which is nil on a fully creditable supply.

Intra-state supplies split the rate between CGST and SGST; an import of services carries the whole rate as IGST under section 5(3) of the IGST Act.

How to calculate it

  1. 1

    Confirm the supply is actually notified

    Reverse charge is not a general rule. It applies only to the categories notified under section 9(3), listed for services in notification 13/2017-Central Tax (Rate) and for goods in notification 4/2017-Central Tax (Rate), and to the narrow class of supplies from unregistered persons still covered by section 9(4). If the supply is not on a list, the supplier charges GST in the ordinary way.

  2. 2

    Raise the self-invoice and the payment voucher

    Where the supplier is unregistered, section 31(3)(f) requires the recipient to issue an invoice for the supply and section 31(3)(g) requires a payment voucher when payment is made. Rule 47A sets a thirty day window from the date of receipt of the supply for the self-invoice. Where the supplier is registered, its own invoice carries the endorsement that tax is payable under reverse charge and no self-invoice is needed.

  3. 3

    Apply the rate to the taxable value

    Use the rate notified for that supply, not the rate on your own outward supplies. Road freight from a goods transport agency under reverse charge is 5 percent; legal services, director's services, security services and renting of commercial property are 18 percent. Split the tax into CGST and SGST for an intra-state supply and charge the whole rate as IGST on an import.

  4. 4

    Pay in cash through GSTR-3B

    Declare the reverse charge liability in Table 3.1(d) of GSTR-3B for the month in which the time of supply falls and discharge it from the electronic cash ledger. There is no way round this: credit in the ledger, however large, cannot be set against a reverse charge liability, which is the single most common cash flow surprise for a business that has just come into the net.

  5. 5

    Claim the credit in the same return

    Where the inward supply is used for taxable output and none of the section 17(5) blocks apply, claim the tax in Table 4(A)(3) of the same GSTR-3B, so the money goes out and the credit lands in the same period. Where the output is exempt, or the supply is a blocked one such as a motor vehicle for personal use, the credit is not available and the reverse charge is a genuine cost.

  6. 6

    Reconcile the reverse charge register annually

    Tie the total in Table 3.1(d) across the year to the self-invoices raised and to the expense ledgers that ought to have attracted reverse charge, typically freight, legal fees, director's remuneration, security and commercial rent. Anything found in the expense ledger but missing from Table 3.1(d) is a liability with interest running at 18 percent from the original due date.

Commonly notified reverse charge categories and the usual rate

Commonly notified reverse charge categories and the usual rate
SupplySupplierRate
Legal services, directly or indirectlyAn advocate or a firm of advocates18%
Road transport of goodsA goods transport agency5%
Services supplied to the companyA director of the company or body corporate18%
Security services, supply of personnelAny person other than a body corporate18%
SponsorshipAny person other than a body corporate18%
Renting of a motor vehicle to a body corporateAny person other than a body corporate5%
Renting of commercial immovable propertyAn unregistered person18%
Import of services, including online servicesA supplier outside India18%

Worked example

Supply
Legal services from an advocate
Taxable value on the bill
₹1,00,000
Rate
18%
Place of supply
Same state as the recipient
Recipient's credit position
Fully eligible, all output is taxable
  • The advocate bills ₹1,00,000 with no GST, because the recipient is the person liable
  • Reverse charge tax = ₹1,00,000 × 18% = ₹18,000, being CGST ₹9,000 and SGST ₹9,000
  • The whole ₹18,000 is deposited in the electronic cash ledger and declared in Table 3.1(d)
  • The same ₹18,000 is claimed as input tax credit in Table 4(A)(3) of the same GSTR-3B
  • Net cost = ₹18,000 - ₹18,000 = ₹0, so the all-in cost of the service stays ₹1,00,000

₹18,000 payable in cash under reverse charge, fully recovered as credit, so the net cost is ₹0

Frequently asked questions

It is an arrangement under section 9(3) and section 9(4) of the CGST Act in which the recipient of a supply, rather than the supplier, is liable to pay the GST. The supplier issues a bill without tax, and the recipient declares and pays the tax directly to the government through its own return. It applies only to notified categories of goods and services, not to supplies generally.
No. Section 2(82) defines output tax so as to exclude tax payable on reverse charge, and section 49(4) permits the electronic credit ledger to be used only against output tax. Reverse charge liability must therefore be deposited in the electronic cash ledger through a challan, even if the credit ledger already holds far more than the amount due.
In the same tax period in which the tax is paid, provided the inward supply is used for taxable or zero-rated output and is not blocked under section 17(5). The liability is declared in Table 3.1(d) of GSTR-3B and the credit is taken in Table 4(A)(3) of the same return, so the cash outflow and the credit land together rather than a month apart.
Only where the supplier is unregistered. Section 31(3)(f) requires the recipient to issue an invoice for such a supply, and Rule 47A, in force from 1 November 2024, requires it within thirty days of receiving the goods or services. A payment voucher is also required under section 31(3)(g). Where the supplier is registered, its own invoice carries the reverse charge endorsement and no self-invoice arises.
Yes. Section 24 lists persons required to pay tax under reverse charge among those who must register regardless of aggregate turnover, so a business below the ₹20 lakh or ₹40 lakh threshold that engages an advocate or pays notified freight has to register. Once registered, the full return calendar applies, not just the reverse charge return.
Yes, and at the ordinary notified rate rather than the composition rate. Section 10(1) opens with the words subject to the provisions of sub-sections (3) and (4) of section 9, so the composition option never displaces reverse charge. The dealer also cannot claim credit for it, which makes the reverse charge a straight cost on top of the composition amount.
The core list still comes from notification 13/2017-Central Tax (Rate) and covers legal services from advocates, goods transport agency freight, director's services, security services and supply of personnel from a non-body-corporate, renting of a motor vehicle to a body corporate, and imports of services. Renting of commercial property by an unregistered person to a registered person and metal scrap from an unregistered supplier were added later. Sponsorship moved partly to forward charge from 16 January 2025, so it is now reverse charge only where the sponsor service provider is not a body corporate.

Sources

Rates and rules on this page come from the following. This is a working aid, not professional advice: confirm anything material with your Chartered Accountant before you act on it.

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