# RCM Tax

RCM Tax configures reverse-charge mechanism tax rates with linked input and output tax accounts.

On this page

Overview List View Form Fields How It Works Actions FAQ Related

Overview

Go to Accounts → Settings → RCM Tax from the left menu. Master data screens do not use Master Update — edit records directly from the list or view.

List View

List columns `Id`, `Name`, `Rate`, `Status` Header actions: New (where applicable) Row actions: edit, delete, suspend, activate, Print

Form Fields

| **Field** | **Description** | |-----------|-----------------| | (see below) | Exact labels from the create/edit form | Create / edit fields Name *, Rate *, Input Tax Account *, Output Tax Account *

All four fields are required. The Input and Output Tax Accounts must be leaf ledger accounts.

Form buttons: Save, Update, Reset, Cancel (as applicable)

How It Works

Reverse charge on purchase invoices

RCM (Reverse Charge Mechanism) applies when the buyer, not the supplier, is liable to pay tax. In the system, RCM is applied on purchase invoices — an RCM Tax is selected on the Purchase Type or on the purchase invoice itself. Each RCM Tax record defines a Rate with linked Input Tax Account and Output Tax Account.

Journal impact on approve

The purchase invoice posts its normal base and payable entries. In addition, RCM adds only the self-assessment tax lines:

RCM does not change the base purchase or payable posting; it only records the reverse-charge tax. This mirrors the statutory requirement to self-assess tax on inward supplies, and RCM transactions appear separately on tax returns and purchase tax reports.

Connected reports: Bill Wise Tax Wise Purchase (transaction type RCM), GSTR2, GSTR3B, Tax Report, Journal Report, Country Specific Tax Reports.

Actions

| **Action** | **Description** | |------------|-----------------| | New | Opens create form | | edit | Opens edit form | | view | Opens read-only view | | delete | Removes the record | | Activate / Suspend | Enables or disables the record |

FAQ

What is reverse charge (RCM)?
Buyer self-assesses tax on certain purchases. RCM tax master defines applicable rates and accounts.

When is RCM applied?
On purchase invoices, when an RCM Tax is set on the purchase type or the invoice. It is not applied on expenses.

How does RCM post?
In addition to the invoice's normal posting, it debits the Input Tax Account and credits the Output Tax Account for the RCM tax amount.

Is RCM in GSTR reports?
India GST reports include RCM sections when transactions are tagged correctly.

Can I disable RCM for a supplier?
Use supplier/item tax configuration and purchase type rules.