Reverse Charge Mechanism (RCM)
Under the Reverse Charge Mechanism (RCM), the buyer of a service — rather than the seller — is responsible for paying GST directly to the government.
Normally, the seller collects GST from the buyer and deposits it with the government. Under Reverse Charge Mechanism (RCM), this flips: the recipient of certain specified goods or services must pay the GST directly, instead of the supplier collecting it.
RCM typically applies to specific notified categories (for example, services from an unregistered supplier to a registered business in certain cases, or specific services like those from goods transport agencies). It rarely applies to a typical freelancer’s day-to-day invoicing.
If a client tells you they’re paying GST under reverse charge on your invoice, it usually means you shouldn’t add GST yourself on that line item — check with a tax professional if you’re unsure whether a specific transaction is subject to RCM.