What is the Full Form of RCM in GST?
The RCM Full Form in GST is Reverse Charge Mechanism. The Indian GST collects taxes via RCM. This is different from supplier GST payments. RCM taxes the buyer.
Knowing RCM
Simply said, RCM transfers GST payment from supplier to buyer. This covers government-specified supplies. Registered merchants must pay GST on RCM imports. Along with import taxes. Registered dealers must pay GST on unregistered supplier purchases. This section guarantees non-GST businesses pay taxes. The government lists GST-eligible goods and services under RCM. This list changes, so stay current.
Effects and Benefits of RCM
GST collection extends to unregistered unorganized traders. Moving GST costs to the receiver reduces small suppliers’ administrative burden and GST compliance. RCM collects GST from imported service sellers primarily outside India.
RCM also has drawbacks:
Registered buyers must receive RCM application notices and pay taxes on time. Their compliance burden rises. GST upfront for unregistered dealer transactions may impact cash flow for certain companies.
GST, RCM Returns
Registered taxpayers record outbound sales on GSTR-1. A registered dealer cannot claim ITC on RCM transactions if the recipient pays the tax. Registered taxpayers record incoming purchases on GSTR-2. RCM-liable receivers must include these transactions in GSTR-2. GST Reverse Charge Mechanism is essential to collection. By understanding RCM, registered businesses may save taxes.