Key points
- TallyPrime 6.0 handles RCM entries using specific ledger configurations for GST payable.
- Bank transactions related to RCM require careful posting to reflect actual cash outflow.
- You will create a purchase voucher for the service or goods, then a journal for RCM liability.
You've received a bank statement showing a payment for services subject to Reverse Charge Mechanism (RCM). Matching this to your books in TallyPrime 6.0 can be tricky, especially when the bank transaction doesn't directly align with your purchase entry. This guide clarifies how to correctly record these RCM bank entries.
What is GST Reverse Charge Mechanism (RCM)?
RCM shifts the tax liability from the supplier to the recipient. This applies to specific services like legal, technical, or transportation. You must pay the GST directly to the government. Recording this in TallyPrime requires creating the liability first, then the payment. It's like paying a bill that wasn't directly issued by the service provider.
How to Record RCM Bank Entries in TallyPrime 6.0 — Step by Step
- Step 1: Record the Purchase Voucher.
- Navigate to Gateway of Tally > Vouchers > F9 Purchase.
- Select the Supplier ledger. Enter invoice details and the taxable value of the service/goods.
- Under GST Details, select 'Yes' for 'Is applicable for Reverse Charge?'.
- Tally Tip: Ensure your supplier is marked as 'Unregistered' or 'Consumer' if they are not charging GST.
- Step 2: Create GST Payable Ledgers.
- If not already created, go to Gateway of Tally > Create > Ledger.
- Create ledgers for 'CGST Payable (RCM)', 'SGST Payable (RCM)', and 'IGST Payable (RCM)'.
- Set their 'Under' group to 'Current Liabilities > Duties and Taxes'.
- Select the appropriate tax type (CGST, SGST, IGST) and set the Tax Unit if applicable.
- Step 3: Record the RCM Journal Entry.
- Go to Gateway of Tally > Vouchers > F7 Journal.
- Debit the expense ledger (e.g., 'Professional Fees', 'Legal Charges').
- Credit 'CGST Payable (RCM)' and 'SGST Payable (RCM)' (or IGST Payable if applicable).
- Enter the GST rates and calculated tax amounts.
- Tally Tip: Ensure the total debit equals the total credit.
- Step 4: Post the Bank Payment.
- Go to Gateway of Tally > Vouchers > F5 Payment.
- Debit the 'CGST Payable (RCM)', 'SGST Payable (RCM)', and 'IGST Payable (RCM)' ledgers.
- Credit your Bank Account ledger (e.g., 'HDFC Bank', 'SBI Account').
- Enter the payment date and narration.
- This entry reflects the actual outflow of cash for the GST payment, not the original service cost.
Mistakes That Cost Indian CAs Hours
- Mistake: Posting the RCM tax directly to a P&L expense ledger without creating a payable liability.
- What breaks: Your GST payable reports will be incorrect, and you might miss the RCM liability.
- Fix: Always book the RCM tax to a 'Duties and Taxes' ledger first, then pay it.
- Mistake: Not selecting 'Yes' for RCM applicability in the purchase voucher.
- What breaks: TallyPrime won't prompt for the RCM journal entry, leading to under-reporting.
- Fix: Double-check the 'GST Details' in your purchase voucher.
- Mistake: Confusing RCM bank payments with regular vendor payments.
- What breaks: Your bank reconciliation will fail, and RCM tax might be wrongly treated as a vendor outflow.
- Fix: Ensure the payment voucher debits the correct 'Payable' GST ledgers, not the supplier ledger.
Pro Tips for 2026
When dealing with numerous RCM transactions, manually entering each one can consume significant time. Consider using Synergy Automation to directly import your bank statements into TallyPrime 6.0. This tool can help match bank entries to existing vouchers, reducing manual intervention for reconciliation. Always verify the automated matches, especially for RCM entries, before posting.
RCM Bank Entry Workflow
Purchase Voucher (Marked for RCM)
Journal Entry (Create GST Payable)
Payment Voucher (Pay GST Liability)
Bank Reconciliation (Match Payment)
Q: How to do GST RCM entry in TallyPrime 6.0 for services?
Record a purchase voucher for the service, marking it for RCM. Then, create a journal entry to book the GST liability to a 'Duties and Taxes' ledger. Finally, record a payment voucher from your bank to clear this liability.
Q: What if my bank statement shows a payment for RCM but I haven't entered the purchase?
You must first create the purchase voucher in TallyPrime 6.0, even if you are recording it after the fact. Then, proceed with the journal and payment entries. Ensure the dates are accurate.
Q: How to handle RCM on goods in TallyPrime 6.0?
The process is similar to services. You'll record a purchase voucher for the goods, ensuring RCM applicability is set. Then, book the GST liability via a journal entry and make the payment from your bank.
Q: RCM entry in Tally ERP 9 vs TallyPrime 6.0?
The core logic remains the same. TallyPrime 6.0 offers a more intuitive interface and enhanced GST features. The navigation paths might differ slightly, but the ledger setup and voucher types used (Purchase, Journal, Payment) are consistent.
Q: How much time does RCM bank entry take in TallyPrime?
Manually, each RCM entry with its associated journal and payment can take 5-10 minutes for an experienced user. Complex bank reconciliations might add more time. Tools that automate bank statement uploads can significantly reduce this time.