Reverse charge
Normally the seller collects the tax and pays it. Under reverse charge, the buyer pays it directly instead.
Normally the seller collects the tax and pays it. Under reverse charge, the buyer pays it directly instead.
Usually you charge GST to your customer, collect it, and hand it to the government. Under reverse charge that flips: the recipient of the supply pays the tax straight to the government, and the supplier's bill does not collect it.
A bill under reverse charge shows the taxable value but does not add tax to the total, and it says on its face that tax is payable on reverse charge. The buyer then accounts for that tax themselves.
This is why a GST invoice has a field for it at all — it is one of the things the format requires you to state either way.
The common ones a small business meets are certain notified services — goods transport being the one most shops actually run into — and some supplies from unregistered suppliers. Which supplies attract it is a notified list that changes, so check the current position rather than assuming from a website.
Tax you owe under reverse charge is tax you have to pay whether or not anybody invoiced you for it. If the bill is not marked, it will not appear in your liability, and the first time anybody notices is at a filing or an assessment.
Aned Book marks reverse charge on the document, so it reaches the return from the bill rather than from somebody's memory.
The buyer — the recipient of the supply — pays it directly to the government rather than paying it to the seller.
It shows the taxable value and states that tax is payable on reverse charge, but it does not add the tax to the amount you collect.
A notified list that changes — goods transport is the one small businesses meet most often. Check the current list on the GST portal.
Aned Book works the tax out from the bill you are raising, so none of the above is a decision anybody has to make at a busy counter.