Reverse Charge Mechanism (RCM) & Exemptions

8.1 Reverse Charge Mechanism (RCM)

In normal GST, the supplier collects and pays GST. Under Reverse Charge Mechanism (Section 9(3) and 9(4) of CGST Act), the recipient/buyer is liable to pay GST — the supplier does not charge it.

Examples of RCM:

• Import of services (from overseas suppliers who cannot register in India)
• GTA (Goods Transport Agency) — recipient pays 5% GST
• Lawyer's services to business entities
• Unregistered supplier to registered business (for certain goods/services)

8.2 Key Exemptions

Fully exempt from GST:

• Agricultural produce (fresh vegetables, fruits, eggs, meat, fish) before processing
• Education — services by educational institutions (up to higher secondary level)
• Health — services by clinical establishments, doctors
• Export of goods and services — zero-rated (eligible for ITC refund)
• Financial services — interest on loans (but banking fees/charges attract 18% GST)

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