{"id":4205,"date":"2026-05-29T20:51:04","date_gmt":"2026-05-29T20:51:04","guid":{"rendered":"https:\/\/aaxonix.com\/resources\/?post_type=glossary&#038;p=4205"},"modified":"2026-05-29T20:51:04","modified_gmt":"2026-05-29T20:51:04","slug":"reverse-charge-mechanism-zoho-books","status":"publish","type":"glossary","link":"https:\/\/aaxonix.com\/resources\/glossary\/reverse-charge-mechanism-zoho-books\/","title":{"rendered":"Reverse Charge Mechanism"},"content":{"rendered":"<style>.gt-body{font-family:'Poppins',sans-serif;color:#111;line-height:1.75}.gt-def{border-left:4px solid #E8650A;padding:16px 20px;background:#fff8f4;border-radius:0 8px 8px 0;margin:0 0 32px;font-size:1.05rem}.gt-section{margin:0 0 36px}.gt-section h2{font-family:'Fraunces',serif;color:#0A1628;font-size:1.5rem;margin:0 0 12px}.gt-example-box{background:#f0f4ff;border-radius:10px;padding:20px 24px;margin:0 0 32px}.gt-example-box strong{color:#2563EB}.gt-related-pills{display:flex;flex-wrap:wrap;gap:10px;margin:0 0 32px}.gt-related-pill{background:#f7f4ef;border:1px solid #ddd8cf;border-radius:20px;padding:6px 16px;font-size:.875rem;color:#0A1628;text-decoration:none}.gt-faq-item{border:1px solid #ddd8cf;border-radius:10px;padding:16px 20px;margin:0 0 12px}<\/style>\n<div class=\"gt-body\">\n<div class=\"gt-def\">Reverse Charge Mechanism (RCM) in Zoho Books is the GST provision under which the buyer pays GST to the government instead of the supplier, applicable for specified categories of supplies and for purchases from unregistered vendors above the threshold.<\/div>\n<div class=\"gt-section\">\n<h2>How Zoho Books Handles RCM<\/h2>\n<p>When you create a bill in Zoho Books for an RCM-applicable transaction (for example, a road transport bill from a GTA, or a legal service bill from an advocate), select &#8220;Reverse Charge&#8221; in the tax field. Zoho Books then does something unique: it posts the GST as both a liability (RCM Output Tax Payable) and an ITC asset (RCM Input Tax Credit), provided the expense is for a business purpose eligible for ITC. The net effect is zero cash GST outflow in many cases, but the liability and ITC are both reported in GSTR-3B.<\/p>\n<\/div>\n<div class=\"gt-section\">\n<h2>Common RCM Scenarios in India<\/h2>\n<p>Services from unregistered vendors: if you pay a freelancer who is not GST-registered and the service is taxable, you pay RCM GST on their fee. Goods Transport Agency (GTA): if you hire a transporter who issues a consignment note, you pay 5% GST on the freight under RCM. Import of services: if a Pune company pays a UK consultant, the IGST on the consultancy is paid under RCM by the Indian company. Advocate services: any fee paid to a legal advocate by a business attracts 18% RCM GST. Zoho Books supports all these scenarios through the Reverse Charge tax configuration.<\/p>\n<\/div>\n<div class=\"gt-section\">\n<h2>RCM Cash Liability<\/h2>\n<p>When the ITC claimed for an RCM transaction is blocked (for example, RCM GST on a personal expense), the liability creates a real cash outflow to the government. In Zoho Books, this appears as an additional GST payable in GSTR-3B that must be paid in cash. Your CA will identify which RCM transactions attract blocked ITC during the year-end review.<\/p>\n<\/div>\n<div class=\"gt-example-box\"><strong>Industry:<\/strong> Manufacturing \u2014 A Pune manufacturer pays INR 2 lakhs to a road transport operator for freight. The GTA does not charge GST on their invoice. The manufacturer records the bill in Zoho Books and selects Reverse Charge: Zoho Books posts INR 10,000 (5% of INR 2 lakhs) as RCM output tax payable and INR 10,000 as IGST ITC. Net GSTR-3B impact is zero cash since ITC offsets the liability.<\/div>\n<div class=\"gt-related-pills\"><a href=\"https:\/\/aaxonix.com\/resources\/glossary\/gst-zoho-books\/\" class=\"gt-related-pill sp-content-link\">GST<\/a><a href=\"https:\/\/aaxonix.com\/resources\/glossary\/input-tax-credit-itc-zoho-books\/\" class=\"gt-related-pill sp-content-link\">Input Tax Credit<\/a><a href=\"https:\/\/aaxonix.com\/resources\/glossary\/gstr-3b-zoho-books\/\" class=\"gt-related-pill sp-content-link\">GSTR-3B<\/a><a href=\"https:\/\/aaxonix.com\/resources\/glossary\/gst-treatment-zoho-books\/\" class=\"gt-related-pill sp-content-link\">GST Treatment<\/a><\/div>\n<div class=\"gt-faq-item\"><strong>What is Reverse Charge Mechanism in Zoho Books?<\/strong><\/p>\n<p>Reverse Charge Mechanism (RCM) in Zoho Books is a GST provision where the buyer pays GST to the government instead of the seller. Zoho Books posts the GST as both a liability and an ITC asset for eligible RCM transactions.<\/p>\n<\/div>\n<div class=\"gt-faq-item\"><strong>Which transactions require Reverse Charge in Zoho Books?<\/strong><\/p>\n<p>Common RCM transactions include services from unregistered suppliers, GTA transport services, import of services, and advocate fees. Select Reverse Charge in the tax field when recording these bills in Zoho Books.<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Reverse Charge Mechanism (RCM) in Zoho Books is the GST provision under which the buyer pays GST to the government instead of\u2026<\/p>\n","protected":false},"template":"","meta":{"seo_title":"Reverse Charge Mechanism | Zoho Books Glossary","seo_description":"Reverse Charge Mechanism (RCM) in Zoho Books shifts GST liability from the supplier to the buyer. Learn which transactions attract RCM and how Zoho Books handles it.","seo_keyword":"reverse charge mechanism zoho books","seo_faqs":"[{\"q\": \"What is Reverse Charge Mechanism in Zoho Books?\", \"a\": \"Reverse Charge Mechanism (RCM) in Zoho Books is a GST provision under which the buyer (rather than the seller) is liable to pay GST to the government. Zoho Books supports RCM by posting the GST amount as both a liability (output tax payable under RCM) and an asset (ITC available under RCM) on the same transaction.\"}, {\"q\": \"Which transactions require Reverse Charge in Zoho Books?\", \"a\": \"Common RCM transactions recorded in Zoho Books include: services received from an unregistered supplier above specified limits, goods and services specified in the RCM notification (such as advocate services, GTA transport, import of services), and purchases from composition dealers.\"}]","term_type":"Technical","glossary_related":"","glossary_links":""},"glossary_category":[1246],"class_list":["post-4205","glossary","type-glossary","status-publish","hentry","glossary_category-zoho-books"],"_links":{"self":[{"href":"https:\/\/aaxonix.com\/resources\/wp-json\/wp\/v2\/glossary\/4205","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/aaxonix.com\/resources\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/aaxonix.com\/resources\/wp-json\/wp\/v2\/types\/glossary"}],"wp:attachment":[{"href":"https:\/\/aaxonix.com\/resources\/wp-json\/wp\/v2\/media?parent=4205"}],"wp:term":[{"taxonomy":"glossary_category","embeddable":true,"href":"https:\/\/aaxonix.com\/resources\/wp-json\/wp\/v2\/glossary_category?post=4205"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}