E-Invoicing to Cover Reverse-Charge Purchases From Unregistered Suppliers

E-invoicing for reverse charge purchases is set to cover two kinds of inward supplies. The first is domestic purchases from unregistered suppliers where you pay Goods and Services Tax (GST) under the Reverse Charge Mechanism (RCM). The second is imports of services. The GST Council recommended this at its 57th meeting on 8 October 2026 for businesses with aggregate annual turnover of ₹5 crore and above.

In practice, the self-invoice you already raise for these purchases would need an Invoice Reference Number (IRN) from the Invoice Registration Portal (IRP). Until the government notifies the change, your current process stays the same.

What has the GST Council recommended on e-invoicing for reverse charge purchases?

The recommendation is item 18.4 of the Ministry of Finance press release on the 57th GST Council meeting. It proposes extending e-invoicing to domestic supplies received from an unregistered person where tax is payable under RCM and to the import of services. It applies to taxpayers with aggregate annual turnover of ₹5 crore and above.

Today, e-invoicing covers invoices that a registered supplier issues for Business-to-Business (B2B) supplies and exports. The buyer receives a document that already carries an IRN. When the supplier is unregistered or based outside India, no supplier-side e-invoice is issued. The only document is the self-invoice the buyer prepares, and the recommendation moves that self-invoice onto the IRP.

How do businesses document these purchases?

Section 31(3)(f) of the Central Goods and Services Tax (CGST) Act, 2017 requires a registered buyer who pays tax under RCM on a supply from an unregistered supplier to issue an invoice. This is the self-invoice. Rule 47A of the CGST Rules, 2017, in force since 1 November 2024, sets the deadline at 30 days from the date you receive the supply.

A few conditions apply to this process:

• RCM tax is paid in cash through the electronic cash ledger. You cannot use Input Tax Credit (ITC) to pay it.
• ITC on the tax paid is available only after you pay it and hold the self-invoice. Central Board of Indirect Taxes and Customs (CBIC) Circular 211/5/2024-GST counts the ITC time limit for these cases from the financial year of the self-invoice date.
• A self-invoice issued after 30 days can attract a penalty. Tax paid after the time of supply attracts interest at 18% per annum.
• Section 31(3)(g) separately requires a payment voucher when you pay the supplier.

Which domestic purchases from unregistered suppliers are affected?

Only purchases where GST is payable under RCM are in scope. A routine purchase from an unregistered supplier that is not notified under RCM carries no tax for the buyer to pay. It needs no self-invoice and would need no e-invoice.

RCM on purchases from unregistered suppliers arises in two ways:

• Under Section 9(3), notified supplies: RCM applies to certain notified supplies, including renting of commercial property by an unregistered person to a registered person, a rule in effect since 10 October 2024. Services from an individual advocate and from a Goods Transport Agency (GTA) that has not opted to pay tax itself are other cases where the supplier is often unregistered.
• Under Section 9(4), notified cases: RCM currently applies to real estate promoters who buy goods and services from unregistered suppliers and fall short of the 80% procurement requirement.

RCM purchases from a registered supplier, such as security services from a registered partnership firm, are outside this change. If that supplier crosses the e-invoicing limit, it already issues the e-invoice. The press release also does not say whether every Section 9(3) and 9(4) case will be covered or only a notified list.

How will imports of services be covered?

When you receive a service from a supplier outside India, you pay Integrated Goods and Services Tax (IGST) on it under RCM. The foreign supplier is not registered in India, so you raise a self-invoice under Section 31(3)(f) within the same 30 days. Common examples are cloud and software subscriptions billed from abroad, overseas consultancy and advertising bought directly from foreign platforms.

Under the recommendation, these self-invoices would also need an IRN. Imports of goods are outside this change. IGST on imported goods is paid through the bill of entry at customs, and no self-invoice is involved.

Which businesses does the ₹5 crore turnover limit cover?

The recommendation uses the same ₹5 crore limit as the current e-invoicing mandate, which has applied since 1 August 2023 under Notification 10/2023-Central Tax. Aggregate turnover is calculated at the Permanent Account Number (PAN) level, so it includes every GSTIN under the same PAN across India. If your turnover crossed the limit in any financial year from 2017–18 onwards, you already e-invoice your sales and would be covered for these purchases too.

Two points still need watching:

• The press release says ₹5 crore and above. The current e-invoicing rule applies when turnover exceeds ₹5 crore. The final notification will settle whether a business at exactly ₹5 crore is covered.
• Some entities are exempt from e-invoicing for now, such as banks, insurance companies and Special Economic Zone (SEZ) units. The press release does not say whether these exemptions will extend to RCM self-invoices.

What is confirmed and what is still awaited?

Only the policy direction is final. A Council recommendation becomes binding only after the government issues the amending notification, so operational details remain open. The table below summarises what the GST Council has recommended and which details businesses must wait for the government to notify:

The same meeting proposed a new Rule 86D for an electronic statement of tax paid under RCM and ITC claimed. The press release does not link it to the e-invoicing change, so treat the two as separate until both are notified.

What should businesses do before the change is notified?

The groundwork is the same whatever the final rules say:

1. List every RCM category in your purchases where the supplier is unregistered.
2. List overseas vendors whose services you pay for, including subscriptions paid by card.
3. Check that each self-invoice is issued within 30 days of receiving the supply.
4. Record the supplier’s name, address and state or country for every self-invoice.
5. Use a separate numbering series for self-invoices.
6. Confirm your aggregate turnover across all GSTINs under your PAN.
7. Track CBIC notifications and Goods and Services Tax Network (GSTN) advisories for the effective date and IRP format.

Conclusion

The tax you pay under RCM, the 30-day self-invoice deadline, and the cash-payment rule remain unchanged. The GST Council has recommended e-invoicing for self-invoices, but the notification, effective date and applicable portal requirements are still awaited. Until these are clarified, existing self-invoicing rules continue to apply. Businesses should continue issuing self-invoices within the prescribed timeline and comply with current reporting requirements.

If you use TallyPrime, you can already generate e-invoices with IRN and QR codes for your sales. Recording RCM purchases and issuing self-invoices on time will help prepare your business for the proposed changes once the applicable requirements are notified.