Reverse charge is the only tax your client can owe without anyone issuing them an invoice for it. Nothing arrives. No GSTIN appears on any document. The liability is created by what the supplier is, not by what the paperwork says — and the paperwork is all most working papers have to go on.
That has been survivable because the department has never held its own version of the number. The 57th GST Council has recommended changing that.
What was recommended on 8 October 2026
Three of the Council's recommendations bear on reverse charge:
- a statement covering reverse-charge liability and the input tax credit claimed on it, proposed as new Rule 86D of the CGST Rules — a portal facility, so that the tax and the credit against it can be read together;
- a companion statement under proposed Rule 86C for input tax credit reversed and later reclaimed in GSTR-3B;
- e-invoicing extended to imports of services and to reverse-charge purchases from unregistered suppliers, for taxpayers with aggregate annual turnover of ₹5 crore or more;
- a mechanism to correct the credit reported in GSTR-3B so it aligns with GSTR-2B, reported as coming in from the April 2027 return period, subject to the legal amendments;
- a circular on reporting credit and reversals in GSTR-3B, to be read together with the Invoice Management System and these new statements.
Every one of these is a recommendation of the Council. None is notified. Nothing below is advice to change a filing position today — it is an argument for reconciling something you may shortly be asked to prove.
Why a statement is different from a return
Today, reverse charge is something you reconstruct. You read the books, find the supplies that attract it, compute the tax, check it was paid, check the credit was taken, and the only version of that working anywhere is the one you built.
A statement reverses the direction. The department holds a figure. Your books hold a figure. The work stops being computation and becomes reconciliation — and reconciliation only takes the time you expect when the two sides were built to be compared in the first place.
That is a different kind of preparation from the one most firms have done.
Four places the books and the return part company
Due, and never paid
The familiar one. An unregistered supplier issues an ordinary bill, nothing says reverse charge, and the entry is indistinguishable in the ledger from one that carries no liability at all. Commercial rent from an unregistered landlord is the clearest current example — entry 5AB has done exactly this since October 2024.
Paid, and the credit never taken
The quieter one, and the more expensive. The tax goes out under reverse charge; the corresponding credit is simply never claimed, because nothing prompts it. No notice ever follows — the department is not short-paid — so it can run for years. A statement that sets tax paid beside credit claimed makes this visible for the first time, and it will be visible to both sides at once.
Estimated, where nothing was due
This is the one worth dwelling on, because it is the direction nobody checks.
On one client's books, a month-wise reconciliation showed ₹1,28,469 of reverse-charge liability against a return that reported none. The books looked wrong. They were not.
The supplies had been picked up by matching ledger names against notified categories, and the ledger it matched was the security agency's own creditor account. The no-GST vouchers sitting on it were not purchases at all — they were the payments to the agency, around ₹64,900 a month. The agency's bills carried GST under forward charge. Nothing was due, and the expense ledger had been correct all along.
We found that in our own detection and fixed it at the source: a ledger whose group chain is a party or balance-sheet account — creditor, debtor, payable, deposit, loan, bank, advance — is no longer a candidate, whatever its name resembles.
The lesson is not about software. Reverse charge cannot be found by reading names. Any working paper that identifies it from ledger descriptions will make this mistake in both directions, and the overstatement is harder to spot than the omission, because an overstatement never produces a notice.
Imported services
Already liable, and about to acquire a document trail if e-invoicing is extended as recommended. Professional fees paid abroad, software subscriptions, group charges from a parent — the entries are ordinary payments in the books and often the only clue is a foreign payee name.
What is worth doing before anything is notified
The work that makes a statement a formality rather than an event is the same work either way:
- Set the three figures side by side, period by period — reverse charge due on the books, reverse charge paid in the return, credit claimed on that tax. Annual totals hide the months that offset each other.
- Settle the categories on each client's own facts, in writing. A list that lives in one person's head is the list that produces a different answer next year.
- Look for the overstatement as well as the shortfall. Everything in the compliance calendar pushes attention toward tax not paid. Nothing pushes it toward tax wrongly computed as due, and the second is both commoner and quieter.
- Check the credit, not only the payment. Reverse charge paid and credit forgone is a real cost that no return will ever flag.
What is settled, and what is not
Settled: reverse charge is already the law, already applies to imported services and to the notified categories, and the credit position already turns on the general credit provisions.
Not settled: the form itself, what exactly it will ask for, and when any of it takes effect. Those arrive with the amendments and the notifications, and not before. Rule 86D and Rule 86C are the numbers the Council's own recommendations carry — but a recommended rule is not a rule, and neither number exists in the CGST Rules today.
The part that does not depend on the notifications is the reconciliation itself. It is worth having regardless of whether the statement arrives in April or at all.
Questions this answers
Has the reverse-charge statement been notified?
No. It is a recommendation of the 57th GST Council, which met on 8 October 2026. The recommendation names it as proposed Rule 86D of the CGST Rules, with a companion Rule 86C for credit reversed and reclaimed, but neither number exists in the rules until the amendments and notifications issue.
What would the statement actually reconcile?
The tax paid under reverse charge against the input tax credit claimed on that tax. Those two figures exist today but sit in different places, and nothing currently sets them side by side for the department.
Who would the e-invoicing extension apply to?
As recommended, taxpayers with aggregate annual turnover of ₹5 crore or more, covering imports of services and reverse-charge purchases from unregistered suppliers.
Why can reverse charge not be found by searching ledger names?
Because a name describes the party, not the nature of the supply. On one client's books, matching names picked up the security agency's creditor account and read the payments to the agency — around ₹64,900 a month — as inward supplies attracting reverse charge. The agency billed under forward charge, so ₹1,28,469 was computed as due when nothing was.
Is paying reverse charge but not claiming the credit a problem?
It is a cost rather than a default. The department is not short-paid, so no notice follows, and it can continue for years unnoticed. A statement setting tax paid beside credit claimed would make it visible to both sides.
What should a firm do before the notifications arrive?
Reconcile period by period rather than annually: reverse charge due on the books, reverse charge paid in the return, and credit claimed on that tax. Annual totals let an overstatement in one month hide a shortfall in another.