Reverse charge: when the buyer pays the tax
A short list of supplies where the liability flips from seller to buyer.
Last checked 20 September 2026
Reverse charge flips who pays the tax: instead of the supplier collecting GST and paying it over, the buyer pays it directly to the government. It applies to a notified list of supplies, to imports of services, and in certain cases to purchases from unregistered suppliers.
Normal charge versus reverse charge
| Normal | Reverse charge | |
|---|---|---|
| Who charges the tax | Supplier, on the invoice | Nobody — the invoice carries no GST |
| Who pays the government | Supplier | Buyer |
| How it is paid | Can be set off against credit | Must be paid in cash, not from credit |
| Who claims credit | Buyer | Buyer, after paying it |
Note the third row. Reverse charge liability cannot be settled out of your credit balance — it has to be paid, and only then can it be claimed back. For a business with a large credit balance that is a genuine cash-flow effect.
When it applies
Three broad situations, each defined by notification rather than by principle:
- Notified supplies. A specific list — goods transport agency services, legal services from an advocate, sponsorship, services from a director to a company, and others.
- Import of services. Where the supplier is outside India and you are the recipient in India.
- Purchases from unregistered suppliers, for the narrow set of cases currently notified.
The list is the law here, not the logic
There is no general principle you can reason from — reverse charge applies to what has been notified, and the notifications change. If you deal in transport, legal services or imports, get the current list confirmed for your business.
What it means on paper
- A supplier issuing an invoice for a reverse-charge supply charges no tax and states that tax is payable on reverse charge — it is one of the required invoice particulars.
- Where you buy from an unregistered supplier under reverse charge, you raise a self-invoice, because there is no compliant invoice from them to work from.
- You pay the tax with your return, and claim the credit subject to the ordinary input tax credit rules.
A common trap
Freight. Goods transport agency services are one of the most common reverse-charge supplies a distributor meets, and transporters do not always spell it out on the bilty. If you pay freight to a GTA, confirm how it should be treated — being unaware of a liability does not remove it.
Do I have to register just because of reverse charge?
A person liable to pay tax under reverse charge is required to register, regardless of turnover thresholds.
Can I ignore it if the amounts are small?
No. The liability exists whatever the value, and it is exactly the kind of thing that surfaces in an audit years later with interest attached.
Is reverse charge the same as TDS under GST?
No. TDS is a deduction made by specified recipients, mostly government bodies, from payments to suppliers. Reverse charge moves the whole tax liability to the recipient.
Sources
- CGST Act 2017, section 9(3) and 9(4); IGST Act section 5(3)
- CBIC — GST Acts, Rules and notifications (cbic-gst.gov.in)
Related reading
What is GST?
One tax on the supply of goods and services, charged at every stage but paid only on the value added.
What is input tax credit?
The tax you paid on purchases, set against the tax you collected on sales.
GST invoice format: what must be on the bill
The fields Rule 46 requires, with a worked example of each.