Generally, when the goods/services are being sold, vendors are liable to pay taxes to the govt. on that transaction. However, for certain goods/services/business types, the tax liability is on clients who are making the purchase.
For example, reverse charge is applicable for Tobacco leaves, cashew nuts, Bidi, used cars, lottery, transport services, security and investigative services, etc.
In the cases where the reverse charge mechanism is applicable, you will have to specify the same while creating Invoices, Proforma Invoices, Quotations, or Expenses. Let's see how to do that on Refrens.
Let's say you are selling Tobacco leaves for which 5% GST is applicable under the reverse charge mechanism.
While creating an invoice, just go to Configure Tax and mark right on "Is Reverse Charge Applicable?".
When you save the Invoice, it will look like below:
As you see, although the GST rate is at 5%, The GST amount will be shown as 0.
Also, at the bottom of the invoice, a note will appear saying that "Taxes applied are subject to Reverse Charge." This means the client would be responsible for the tax liability.
You can also create self-invoices via expenditures when you buy something under the reverse charge mechanism.
You can view all your documents with Reverse charges directly from the respective document dashboards: