RCM Invoice Format under GST: How to Create with Example

Creating a proper Reverse Charge Mechanism (RCM) invoice format under GST is crucial for businesses dealing with reverse charge transactions. Compliance starts with the correct format, whether for invoicing services and goods procurement from unregistered dealers or other RCM scenarios. In this guide, we'll walk through how to make RCM invoices, sample formats, GSTR-1 reporting, and everything the CFOs, accountants, and GST practitioners need to know.

How to Prepare an RCM Invoice in GST 

A taxpayer liable to pay tax under the Reverse Charge Mechanism (RCM) has to issue an invoice for goods or services or both received by them. The receiver shall mention the fact that the tax is paid under RCM. In addition, they have to issue a payment voucher while making payment to the supplier.

Here are the steps a taxpayer should follow while generating a self-invoice in an ERP

Identify the transaction subject to RCM

• Confirm that the purchase is from an unregistered or registered supplier for which RCM is  applicable under GST law
• Examples include: legal services, goods transport, imports, etc

Create a new purchase invoice

• Go to the purchase module
• Choose "create new purchase invoice" or a similar action

Enter supplier details

• Vendor name: Enter the supplier’s name (can be unregistered)
• GSTIN: If the supplier is unregistered, leave this blank
• Address and state: Fill correctly for tax jurisdiction

Enter invoice details

• Invoice Number & Date – Assign a unique number and mention the date of issue.
• Place of Supply – Determine based on the buyer’s and supplier’s location.

Create a self-invoice (if the supplier is unregistered)

• Where supplies are received from an unregistered supplier, generate a self-invoice in compliance with GST provisions.
• Clearly mention “Self-invoice issued under Reverse Charge Mechanism (RCM)” on the document.

Enter item/service details

• Add each item or service purchased
• Enter quantity, rate, and value

Set GST tax type as RCM

• Under the tax section, select “reverse charge applicable”
• Most ERP systems have a checkbox or dropdown to enable RCM.
• Do not charge GST in the supplier’s invoice, as the taxpayer (recipient) pays the tax.

Calculate reverse charge tax

• Add applicable GST:
  • CGST & SGST (if intra-state)
  • IGST (if inter-state)
• The ERP should calculate tax under reverse charge and show tax payable by the recipient

Post journal entry (optional but recommended)

Some ERPs require manual journal entries for RCM:

Input GST A/c (CGST/SGST/IGST) Dr

To RCM Payable A/c

Save and approve the invoice

• Save the invoice.
• Get approval if your ERP workflow requires it.

File in GST Returns

Report RCM invoices in GSTR-3B (Table 3.1(d)) and GSTR-1, if applicable..

Note: You can also use accounting platforms like Clear GST to auto-generate RCM invoices.

RCM Invoice Format

• Recipient Name and Address 
• Recipient's GSTIN: GSTIN of the taxable person
• Invoice number & date: Unique serial number with issue date 
• Supplier's details: Name and address of supplier 
• Description of goods/services: Description of item/service, HSN/SAC code , Quantity or Unique Quantity Code thereof
• Taxable value amount before GST 
• Rate & amount of GST according to GST slab (5%, 18%, etc.) 
• Declaration "tax payable under reverse charge" 
• Signature/digital signature by authorised signatory of the recipient 

RCM Invoice Example 

Having a proper RCM invoice format under GST provides smooth compliance and audit preparedness.