Under reverse charge, the person who pays GST to the Government is not the supplier. The GST Council's flyer on the Reverse Charge Mechanism describes it as the case where "the liability to pay tax is on the recipient of supply of goods or services instead of the supplier". The CGST Act uses three routes. Section 9(3) makes the recipient liable for notified categories of supply. Section 9(4) makes a notified class of registered recipients liable for notified supplies received from unregistered suppliers. Section 9(5) is different: it makes an electronic commerce operator liable for notified services supplied through its platform.
Reverse charge changes four things together: who deposits the tax, which documents are needed, when the liability arises and when credit can be taken. Most errors in practice come from treating it as a single rule rather than three separate routes, each switched on only by a specific notification entry.
The three routes side by side
| Route | Who pays | What switches it on | Operative notification |
|---|---|---|---|
| Section 9(3) | Recipient | A notified category of supply, supplier and recipient | Notification 13/2017-Central Tax (Rate) for services, as amended |
| Section 9(4) | Notified class of registered recipient | A notified supply from an unregistered supplier | Specific notified entries only |
| Section 9(5) | Electronic commerce operator | A notified service supplied through the operator | Notification 17/2017-Central Tax (Rate), as amended |
Section 9(3): services where the recipient pays
The base list is Notification No. 13/2017-Central Tax (Rate) dated 28 June 2017. Each entry names the service, the supplier and the recipient, and all three must match. The entries CAs meet most often:
| Sl. | Service | Supplier | Recipient who pays |
|---|---|---|---|
| 1 | Transport of goods by road by a goods transport agency | GTA | Specified recipients such as a factory, society, co-operative society, GST-registered person, body corporate, partnership firm or casual taxable person |
| 2 | Representational services before any court by an individual advocate, including a senior advocate | Individual advocate, senior advocate or firm of advocates | Any business entity in the taxable territory |
| 3 | Services of an arbitral tribunal to a business entity | Arbitral tribunal | Any business entity in the taxable territory |
| 4 | Sponsorship to a body corporate or partnership firm | Any person other than a body corporate (after the 2025 amendment) | Body corporate or partnership firm in the taxable territory |
| 5 | Services by the Central or State Government, Union territory or local authority to a business entity | Government or local authority | Any business entity in the taxable territory |
| 6 | Services by a director of a company or body corporate to that company | Director | The company or body corporate |
| 7 | Services by an insurance agent | Insurance agent | Person carrying on insurance business |
| 8 | Services by a recovery agent | Recovery agent | Banking company, financial institution or NBFC |
The list has been amended many times since 2017, so read the current entry, not a summary. Two recent changes show why.
Sponsorship by a body corporate moved out of reverse charge
Notification No. 07/2025-Central Tax (Rate) dated 16 January 2025, issued on the 55th GST Council's recommendations, inserted "other than a body corporate" after "Any person" in the supplier column of serial 4. Sponsorship supplied by a company to another company is therefore no longer under reverse charge; the sponsoring company charges GST in the normal way. Sponsorship by an individual, firm or other non-corporate person to a body corporate or partnership firm stays under reverse charge.
Commercial rent from an unregistered landlord
The 54th GST Council meeting on 9 September 2024 recommended bringing "renting of commercial property by unregistered person to a registered person" under reverse charge. This is serial 5AB of Notification 13/2017. The same Notification 07/2025 then inserted "other than a person who has opted to pay tax under composition levy" after "Any registered person" in the recipient column of 5AB. So a composition taxpayer renting a shop from an unregistered owner does not pay GST on that rent under reverse charge; a regular registered tenant does.
Section 9(4): only what is notified
Section 9(4) is not a blanket charge on every purchase from an unregistered vendor. It applies only to the class of registered persons and the supplies that the Government has specifically notified. Before booking a section 9(4) liability, find the notification entry that covers both the recipient's class and the supply. If there is none, there is no reverse charge under this route. The same 54th Council meeting also recommended reverse charge on supply of metal scrap by an unregistered person to a registered person; check the operative notification for the scope before applying it.
Section 9(5): the platform pays
Here the liability moves to the electronic commerce operator, not to the buyer. Notification No. 17/2017-Central Tax (Rate) dated 28 June 2017 started with two services: transport of passengers by radio-taxi, motorcab, maxicab and motor cycle, and accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the supplier is itself liable for registration under section 22(1). Later amendments added more:
- Notification No. 17/2021-Central Tax (Rate) dated 18 November 2021, effective 1 January 2022, added restaurant service supplied through an operator, "other than the services supplied by restaurant, eating joints etc. located at specified premises".
- Notification No. 16/2023-Central Tax (Rate) dated 19 October 2023, effective 20 October 2023, added transport of passengers by omnibus through an operator, except where the supplier is a company as defined in section 2(20) of the Companies Act, 2013.
- Notification No. 08/2025-Central Tax (Rate) dated 16 January 2025, effective 1 April 2025, aligned the meaning of "specified premises" with clause (xxxvi) of paragraph 4 of Notification 11/2017-Central Tax (Rate).
A customer ordering food through an app does not pay GST under reverse charge. The restaurant does not charge GST on that supply either, unless it is at specified premises. The operator collects and pays.
Notified goods
Reverse charge also applies to some goods. The Council's flyer lists cashew nuts (not shelled or peeled), bidi wrapper leaves, tobacco leaves, silk yarn, raw cotton, lottery, and used, seized or confiscated goods, each supplied by specified persons to registered recipients. The rate notifications carry the exact supplier and recipient conditions.
When the tax becomes payable
The GST Council flyer sets out the reverse charge time of supply:
| Goods (section 12(3)) | Services (section 13(3)) |
|---|---|
| Earliest of: date of receipt of goods; date of payment; the date immediately after thirty days from the supplier's invoice | Earlier of: date of payment; the date immediately after sixty days from the supplier's invoice |
Where these cannot be determined, the time of supply is the date of entry in the recipient's books of account.
Worked example: same dates, different answers
A supplier's invoice is dated 10 May 2026. Goods reach the buyer on 5 June 2026 and payment is made on 20 July 2026.
- If it is a supply of notified goods: thirty days from 10 May ends on 9 June, so the third date is 10 June. The earliest of 5 June, 20 July and 10 June is 5 June 2026, and the liability falls in the June return.
- If it is a notified service: sixty days from 10 May ends on 9 July, so the second date is 10 July. The earlier of 20 July and 10 July is 10 July 2026, and the liability falls in July even though the payment was made later.
Month-end reviews should list unpaid reverse charge invoices by age, because a services invoice left unpaid for more than sixty days creates the liability anyway.
Documents
A supplier's tax invoice "has to mention whether the tax in respect of supply in the invoice is payable on reverse charge", as the flyer puts it; the same applies to receipt vouchers and refund vouchers. Where the supplier is unregistered and the recipient is liable, the recipient generates the document trail itself, since there is no supplier invoice to rely on. Keep the agreement, the recipient-side invoice and proof of payment together for each such supply.
Paying the tax and taking credit
- Cash only. The flyer states that "reverse charge liability cannot be discharged by using input tax credit". The tax goes through the electronic cash ledger.
- Credit follows payment. Once the reverse charge tax is paid, the recipient can take credit of it if the normal conditions are met and no block under section 17 applies.
- No credit for the supplier. A supplier "cannot take ITC of GST paid on goods or services used to make supplies on which recipient is liable to pay tax".
- Registration. A person liable to pay tax under reverse charge must register, and the turnover threshold does not apply to that person.
Worked examples
Director's sitting fees
ABC Private Limited, registered in Karnataka, pays a non-executive director ₹1,00,000 as sitting fees for a board meeting in Bengaluru. Serial 6 of Notification 13/2017 applies: the company pays the GST, not the director. Assuming the 18% rate, the company pays CGST ₹9,000 and SGST ₹9,000 in cash, then takes credit of ₹18,000 in the same or a later return, as the expense is for business. The director's invoice or fee note carries no GST.
Office rent from an unregistered owner
XYZ LLP, a regular GST-registered firm in Delhi, rents an office from an individual owner who is not registered, at ₹1,50,000 a month. Serial 5AB applies. Assuming 18%, XYZ pays ₹27,000 a month (CGST ₹13,500 and SGST ₹13,500) in cash and then claims credit for business use. If XYZ had opted for composition, the 2025 amendment would take it out of 5AB and no reverse charge would arise on this rent.
Sponsorship of a seminar
A private limited company sponsors a professional seminar organised by another company. Since 2025 the supplier column excludes a body corporate, so the organiser charges GST on its invoice under forward charge. If the organiser were a partnership firm or an association that is not a body corporate, the sponsoring company would pay under reverse charge.
Errors that keep recurring
- Treating every purchase from an unregistered supplier as a section 9(4) case without a notified entry.
- Using the credit ledger to pay the reverse charge tax itself.
- Applying the old sponsorship rule to body-corporate sponsors after the 2025 amendment.
- Charging reverse charge on commercial rent for a composition taxpayer.
- Confusing section 9(5) operator liability with a recipient-side charge.
- Using the goods time-of-supply rule for services, or the reverse.
- Taking credit before the reverse charge tax is paid, or where section 17 blocks it.
Working checklist
- Pin the transaction to section 9(3), 9(4) or 9(5).
- Read the current notification entry and confirm supplier, recipient and supply all match.
- Check for later amendments to that entry, such as Notification 07/2025.
- Determine the rate and place of supply.
- Apply the correct time-of-supply rule for goods or services.
- Build the document trail where the supplier is unregistered.
- Pay the tax through the cash ledger.
- Take credit only after payment and a section 16 and 17 review.
Updated on 27 September 2026: retitled; added the Notification 13/2017 entry table, the January 2025 changes to sponsorship and to commercial rent for composition taxpayers, the section 9(5) notification history, a dated time-of-supply example and worked figures. Unverifiable references were removed.
