Sale of RCM Supplies to Unregistered Dealers or Consumers in TallyPrime

If your business sells goods or services that fall under Reverse Charge Mechanism (RCM) to an unregistered dealer or a consumer, you still need to follow the GST rules carefully.

Even though your buyer is not registered under GST, you still do not collect GST from them in an RCM supply.

Instead, you must ensure that your sales are properly recorded and reported in TallyPrime.

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1. What Happens When There is a Sale of RCM Supplies to Unregistered Dealers or Consumers in TallyPrime?

When RCM applies:

• The recipient of goods or services is responsible for paying GST.
• If the buyer is unregistered, they are not liable to pay GST, but you still do not charge GST as the supplier.
• You must record the sale without GST, and declare it appropriately in your returns.

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2. Example Scenario: Sale of RCM Supplies to Unregistered Dealers or Consumers in TallyPrime

Let’s say:

• You are selling scrap materials worth ₹15,000
• The buyer is a consumer or unregistered small business
• GST under RCM is applicable, but since the buyer is unregistered, no GST will be paid by anyone
• You must still report this sale correctly in TallyPrime

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3. Step-by-Step Guide to Record RCM Sales to Unregistered Dealers in TallyPrime

Step 1: Enable GST in TallyPrime

1. Press F11: Features > Statutory & Taxation
2. Set Enable GST: Yes
3. Set Enable Reverse Charge Mechanism: Yes

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Step 2: Create Customer Ledger (Unregistered Dealer/Consumer)

1. Go to Gateway of Tally > Accounts Info > Ledgers > Create
2. Name: Local Consumer or Unregistered Dealer
3. Under: Sundry Debtors or Cash
4. Set GST Registration Type: Unregistered

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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 (Unregistered)
3. Under: Sales Accounts
4. Set Is GST Applicable: Yes
5. Nature of Transaction: Sales Taxable
6. Set Is Reverse Charge Applicable: Yes

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Step 4: Create a Stock Item (if applicable)

1. Go to Inventory Info > Stock Items > Create
2. Name: Scrap Material
3. Unit: Kg, Piece, etc.
4. Enable GST: Yes
5. Enter HSN Code
6. Leave GST Rate blank – because you won’t collect GST

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Step 5: Record the Sales Voucher

1. Go to Gateway of Tally > Vouchers > F8: Sales
2. Select Party Ledger: Local Consumer
3. Sales Ledger: Sales – RCM Supplies (Unregistered)
4. Select the stock item (Scrap Material)
5. Do not add any GST tax ledgers

Tally will record this sale as Reverse Charge applicable, but no tax will be charged or collected.

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4. Reporting in GST Returns: Sale of RCM Supplies to Unregistered Dealers or Consumers in TallyPrime

In GSTR-1:

• This transaction is shown under B2C sales with RCM flag

In GSTR-3B:

• It is not added to your output tax liability

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5. Summary of Sale of RCM Supplies to Unregistered Dealers or Consumers in TallyPrime

Details	Amount (₹)
Sale of Scrap (RCM applicable)	15,000
Buyer Type	Unregistered/Consumer
GST Charged	0
Reverse Charge Applicable	Yes
Tax Paid to Govt	None (buyer is unregistered)

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6. Conclusion

Even when selling RCM-supplies to unregistered persons, you need to:

• Mark the supply as reverse charge
• Avoid charging GST
• Report it correctly in returns using TallyPrime

This ensures your books remain GST-compliant without overcharging or underreporting.

You’re also protected in case of audits or GST portal validations.

Let me know if you’d like help with how this reflects in your invoice or in your GSTR-1 summary.