GSTAgent›Workflows›Missed RCM Detection

RCM Compliance⏱ 2 min

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Missed RCM Detection

Scan all expenses for Sec 9(3)/9(4) exposure with zero GST booked. Catch liabilities before the department does.

Missed RCM is one of the top causes of GST notices for businesses and CA clients. When a freight payment, legal fee, or rent is made to an unregistered supplier and no RCM is booked, the exposure compounds — tax + interest at 18% p.a. from due date + penalty up to 100%. GSTAgent scans every expense entry automatically.

Sec 9(3)Sec 9(4)PenaltyNotice prevention

Scan for Missed RCM →

The Problem

Why this needs to be automated

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No GST on invoice means no automatic flag

RCM invoices carry zero GST — the supplier doesn't charge it. So nothing in the books signals that tax is due. The CA must recognise RCM from the nature of the expense alone.

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Interest runs from original return due date

If RCM for April was not paid, interest runs from 20th May (due date of April GSTR-3B) — not from the date the CA discovers the miss. For old misses this can mean 2-3 years of interest.

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Department's data sources are comprehensive

GSTN cross-references your purchase data with supplier registration status. An unregistered supplier with large payments to you is a flag in their system — even if you've filed cleanly.

Regulatory Context

The law that makes this matter

Sec 9(3)

Notified categories — mandatory RCM

RCM is mandatory for 15 notified categories regardless of supplier registration status for some, and specifically for unregistered suppliers for others.

Sec 9(4)

Unregistered supplier purchases

Purchases from unregistered suppliers in notified categories attract RCM. Applicability varies by category — some have been suspended, others remain active.

Sec 73/74

Demand + penalty for missed RCM

Missed RCM attracts demand under Sec 73 (non-fraud) with 10% penalty minimum or Sec 74 (fraud/suppression) with 100% penalty.

How It Works

4 steps. Mostly automated.

All expense entries scanned

Every Journal, Payment, and zero-GST Purchase voucher is scanned — not just entries already booked as RCM.

Pattern matching against 15 RCM types

Two-pass classifier — keywords and ledger name regex — identifies expenses that match GTA, rent, legal, security, director fee patterns.

Zero-GST RCM entries flagged

Entries matching RCM patterns with GST = 0 are flagged as "Possible Missed RCM" — separate from confirmed RCM entries.

Liability estimated with interest

Estimated RCM liability computed. Interest at 18% p.a. from original return due date. Total exposure shown per entry.

Sample Output

What you actually see

Sample data — Metro Print Works Pvt. Ltd · FY 2026-27

Expense entries scanned

219

Confirmed RCM — correctly booked

Possible missed RCM entries

GTA freight — missed

3 entries, ₹2,44,000 taxable

Legal fees — missed

1 entry, ₹60,000 taxable

Estimated liability + interest

₹21,140

Sample data for illustration only. Actual results depend on your client's Tally data. Not professional tax advice.

Edge Cases

How GSTAgent handles the tricky ones

Scenario	GSTAgent Output
Single-word vendor name (e.g. "Kriti") with large amount	Flagged as UNREGISTERED_PURCHASE > ₹5,000 — Sec 9(4) check recommended
Freight paid to registered transporter with GSTIN	skip_rcm guard active — not flagged (registered supplier)
Small amounts below threshold	GTA threshold ₹750 per consignment — amounts below excluded

2 min

Entire expense ledger scanned

RCM patterns checked per entry

18%

Interest p.a. from due date

100%

Max penalty if Sec 74 applies

FAQ

Common questions

What is the difference between Sec 9(3) and Sec 9(4) RCM?

Sec 9(3) covers specifically notified categories — GTA, legal, rent, security etc. Sec 9(4) covers purchases from unregistered suppliers in notified sectors (currently limited).

Is Sec 9(4) currently applicable?

Sec 9(4) was suspended broadly in 2017 and re-notified narrowly. Currently applicable to specific notified categories — mostly real estate related. GSTAgent flags for CA to verify applicability.

Can I voluntarily pay missed RCM without penalty?

Yes — voluntary payment under DRC-03 before the department issues a notice avoids penalty (only tax + interest payable). After notice, penalty is mandatory.

What if the GTA is registered and has opted for 12% GST?

Then it's a normal B2B purchase — ITC claimable normally. RCM at 5% applies only when GTA is unregistered or has not opted for 12%.

Ready to run this workflow?

A GSTAgent subscription code is required. CA firm plans from ₹1,400/month for 10 clients.

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