GST Payment Vouchers for Reverse Charge (RCM)

When a transaction falls under the reverse charge mechanism (RCM) in Goods and Services Tax (GST), the recipient of goods or services assumes responsibility for paying the tax, rather than the supplier. In such instances, since the supplier does not issue a tax invoice, the buyer is required to issue a payment voucher to the supplier of the goods or services.

Issuing Payment Vouchers for Reverse Charge Transactions

A GST-registered recipient must issue a payment voucher to the supplier for any goods or services subject to the reverse charge mechanism.For example, consider Ajay Cashew House, a registered entity in Delhi, purchasing cashew nuts for Rs 100,000 from Vikram, an agriculturist in Karnataka. In this scenario, Ajay Cashew House is liable for reverse charge. It would be required to pay CGST and SGST amounting to Rs 5,000 (5% of Rs 100,000) and also issue a payment voucher for Rs 100,000 to Vikram.Similarly, if Vikram Logistics, a registered Goods Transport Agency (GTA) in Karnataka, provides transportation services valued at Rs 200,000 to a factory of Ajay Fireworks in Delhi, Ajay Fireworks must pay CGST and SGST of Rs 10,000 (5% of Rs 200,000) under reverse charge. A payment voucher for Rs 200,000 would need to be issued by Ajay Fireworks to Vikram Logistics at the time of making the payment.

Essential Information for GST Payment Vouchers

As per GST regulations, a payment voucher must include specific details:

1. The supplier’s name, address, and Goods and Services Tax Identification Number (GSTIN), if registered.
2. A unique, consecutive serial number, which should not exceed 16 characters, for the financial year.
3. The date when the payment voucher is issued.
4. The recipient’s name, address, and GSTIN.
5. A clear description of the goods or services for which tax is paid under reverse charge.
6. The total amount remitted to the supplier.
7. The applicable tax rates and amounts for CGST, SGST/UTGST, IGST, and any cess.
8. For interstate transactions, the place of supply, including the state name and code.
9. The physical or digital signature of the supplier or their authorized representative.

Summary

Recipients of goods or services under the reverse charge mechanism are obligated to generate a payment voucher at the time of making payment for such transactions.