The Reverse Charge Mechanism had created by EU to simplify trade within single market. It was deffered by Indian government on 30th September 2017. Under Reverse Charge Mechanism, GST is levied on goods and services procured from unregistered dealers by the buyer and deposited with the government. This is an process to ensure that transactions by unregistered people don't escape tax.

GST Reverse Charge Mechanism is not applicable under the situations mentioned in section 9 (4) and section 9(3).

If a vendor who is not registered under GST, supplies goods to a person who is registered under GST, then Reverse Charge would apply. This means that the GST will have to be paid directly by the receiver to the Government instead of the supplier.

The registered dealer who has to pay GST under reverse charge has to do self-invoicing for the purchases made.

For Inter-state purchases the buyer has to pay IGST. For Intra-state purchased CGST and SGST has to be paid under RCM by the purchaser.

In case of reverse charge, the time of supply shall be the earliest the date of receipt of goods or

the date of payment or

the date immediately after 30 days from the date of issue of an invoice by the supplier.If it is not possible to determine the time of supply, the time of supply shall be the date of entry in the books of account of the recipient.