Sale of RCM Supplies to Registered Dealers in TallyPrime: 5 Steps

Some goods and services fall under the Reverse Charge Mechanism (RCM), where the recipient (buyer) is responsible for paying GST instead of the supplier (seller).

If your business sells such RCM-applicable supplies to registered dealers, you must record the transaction correctly in TallyPrime.

This post explains how to do that in simple steps with an easy-to-understand example.

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1. What are RCM Supplies in TallyPrime?

These are goods or services where the buyer pays GST directly to the government, even though you are selling the item.

For example:

• Raw cotton
• Certain construction materials
• Legal services (when sold by law firms)

As the seller, you must mention that GST is payable by the buyer under Reverse Charge, but you do not charge GST in the invoice.

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2. Example Scenario of Sales of RCM Supplies to Registered Dealers in TallyPrime

Let’s say:

• You are a supplier of raw cotton, which is an RCM supply
• A registered buyer purchases ₹25,000 worth of cotton from you
• GST is not collected by you; the buyer will pay it directly
• You must record this sale properly in TallyPrime

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3. Step-by-Step Process to Record RCM Sales in TallyPrime

Step 1: Enable GST in TallyPrime

1. Press F11 (Features) > Statutory & Taxation
2. Enable Goods and Services Tax (GST): Yes
3. Set/alter GST details: Yes
4. Enable the option Is Reverse Charge Applicable: Yes

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Step 2: Create the Buyer’s Ledger

1. Go to Gateway of Tally > Accounts Info > Ledgers > Create
2. Name: XYZ Traders (Registered Dealer)
3. Under: Sundry Debtors
4. Set GST Registration Type: Regular
5. Enter GSTIN if available

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Step 3: Create a Sales Ledger for RCM Supplies

1. Go to Accounts Info > Ledgers > Create
2. Name: Sales – RCM Supplies
3. Under: Sales Accounts
4. Enable GST: Yes
5. Nature of Transaction: Sales Taxable
6. Is Reverse Charge Applicable: Yes

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Step 4: Create the Stock Item

If applicable, create a stock item like:

1. Go to Inventory Info > Stock Items > Create
2. Name: Raw Cotton
3. Set Units: Kg, Meter, etc.
4. Enable GST: Yes
5. Set HSN Code and leave GST rate blank, since GST is not collected by you

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Step 5: Record the Sales Voucher

1. Go to Gateway of Tally > Vouchers > F8: Sales
2. Select Party Ledger: XYZ Traders
3. Select Sales Ledger: Sales – RCM Supplies
4. Add stock item: Raw Cotton, quantity and rate
5. Do not apply any tax ledgers

Tally will treat this as an RCM transaction, and the tax liability will not be shown on your side.

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4. What Will Appear in GST Reports in TallyPrime?

• In GSTR-1, the supply will appear in B2B invoices with a flag that tax is payable under Reverse Charge
• In GSTR-3B, this value is not added to your tax liability
• The buyer will reflect this transaction in their GSTR-3B under reverse charge payable

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5. Summary of the Transaction of Sales of RCM Supplies to Registered Dealers in TallyPrime

Description	Amount (₹)
Sale of Raw Cotton (RCM supply)	25,000
GST Payable by Buyer (not shown)	0
Total Invoice Value	25,000

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6. Conclusion

Recording RCM sales in TallyPrime is easy if you follow the correct steps.

The key is to:

• Use a sales ledger with reverse charge enabled
• Do not apply GST manually
• Ensure the buyer is marked as a registered dealer

Tally will automatically ensure compliance with GST rules.

Always check your GSTR-1 before filing to make sure the transaction is reported correctly.

Let me know if you’d like to see how this appears in print format or how to configure for service-based RCM sales.