Reverse Charge Mechanism (RCM)
Auto-handles RCM for unregistered vendor purchases
When you buy from an unregistered vendor and need to pay GST under reverse charge, Wiseventory tracks it correctly and surfaces it on GSTR-3B.
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What do you get out of it?
The tax you owe on purchases from unregistered suppliers stops being the thing you forget. You mark the purchase as reverse charge when you record it, and the liability accumulates into your GSTR-3B on its own — instead of surfacing months later when your CA reconciles.
How does it work?
- 1
Flag it when you record the purchase
Reverse charge is a property of the purchase order, set at the point you create it. That is the moment you know — you are looking at a supplier without a GSTIN — rather than at month end when the context is gone.
- 2
It stays on the record
The flag is stored on the purchase order itself, so the classification survives. Reopening a purchase months later still shows it was a reverse-charge transaction.
- 3
It accumulates into your return
When GSTR-3B is prepared, reverse-charge purchases are totalled into their own taxable value and tax figures, separately from ordinary input tax credit — which is how the return expects to see them.
- 4
Sales invoices can carry it too
The same reverse-charge flag exists on invoices, for the cases where a supply you make falls under reverse charge and the recipient is liable rather than you.
What situations does it handle?
A supplier who is sometimes registered
Because the flag sits on each purchase rather than on the supplier, a vendor who registers mid-year does not require you to restate their history. Older purchases keep their classification; new ones are recorded as they actually are.
Reverse charge and ordinary purchases in one month
The two are accumulated separately when the return is prepared, so a month mixing registered and unregistered suppliers does not require you to split the ledger by hand.
How do you get more out of it?
- Flag reverse charge at the moment you record the purchase. That is when you are looking at the supplier and know their registration status.
- Because the flag lives on the purchase rather than the supplier, a vendor who registers mid-year needs no history clean-up.
- Reverse-charge totals appear separately in GSTR-3B, so you can see your liability as its own number before you file.
- Worth a five-minute conversation with your CA about which of your regular suppliers fall under it. Once you know, the recording is mechanical.
Common questions
When does reverse charge actually apply?
Broadly, on notified categories of supply and on certain purchases from unregistered suppliers, where the liability shifts from the seller to you as the buyer. The specifics change with notifications, so confirm the current position with your CA. Wiseventory's job is to make sure that once you have decided, the amount does not get lost.
Do I mark it on the purchase or on the supplier?
On the purchase. That is deliberate — a supplier's registration status can change, and tying the flag to the transaction means your history stays accurate instead of being retrospectively rewritten when they register.
Where does it show up at filing time?
In GSTR-3B, as its own taxable value and tax total rather than mixed into ordinary input tax credit. Keeping it separate is what lets the return reconcile.
Can a sales invoice be under reverse charge?
Yes. The flag exists on invoices as well as purchase orders, for supplies where the recipient carries the liability instead of you.
Included free in every plan
Reverse Charge Mechanism (RCM) isn't an upgrade or paid add-on. It sits inside Wiseventory alongside GST billing, inventory, POS, GSTR-1 filing and the rest. One simple price for everything.
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