{"id":9008,"date":"2025-04-29T19:02:11","date_gmt":"2025-04-29T19:02:11","guid":{"rendered":"https:\/\/www.caindelhiindia.com\/blog\/?p=9008"},"modified":"2025-04-29T19:22:17","modified_gmt":"2025-04-29T19:22:17","slug":"compulsory-itc-reversal-for-non-payment-within-180-days","status":"publish","type":"post","link":"https:\/\/www.caindelhiindia.com\/blog\/compulsory-itc-reversal-for-non-payment-within-180-days\/","title":{"rendered":"Compulsory ITC Reversal for Non-Payment within 180 Days"},"content":{"rendered":"<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-9009\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/04\/Rule-37-.jpg\" alt=\"Rule 37: Compulsory Input tax credit Reversal for Non-Payment within 180 Days\" width=\"980\" height=\"940\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/04\/Rule-37-.jpg 980w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/04\/Rule-37--300x288.jpg 300w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/04\/Rule-37--768x737.jpg 768w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/04\/Rule-37--800x767.jpg 800w\" sizes=\"(max-width: 980px) 100vw, 980px\" \/><\/h2>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e9d8504c29d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e9d8504c29d\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caindelhiindia.com\/blog\/compulsory-itc-reversal-for-non-payment-within-180-days\/#Conditions_to_Avail_Input_tax_credit_%E2%80%93_Section_162\" title=\"Conditions to Avail Input tax credit \u2013 Section 16(2) \u00a0:\">Conditions to Avail Input tax credit \u2013 Section 16(2) \u00a0:<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caindelhiindia.com\/blog\/compulsory-itc-reversal-for-non-payment-within-180-days\/#Additional_Conditions_to_Know_about_ITC\" title=\"Additional Conditions to Know\u00a0 about ITC\u00a0\">Additional Conditions to Know\u00a0 about ITC\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caindelhiindia.com\/blog\/compulsory-itc-reversal-for-non-payment-within-180-days\/#Input_tax_credit_Reversal_Scenarios\" title=\"Input tax credit Reversal Scenarios\">Input tax credit Reversal Scenarios<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caindelhiindia.com\/blog\/compulsory-itc-reversal-for-non-payment-within-180-days\/#Compulsory_Input_tax_credit_Reversal_for_Non-Payment_within_180_Days\" title=\"Compulsory Input tax credit Reversal for Non-Payment within 180 Days\">Compulsory Input tax credit Reversal for Non-Payment within 180 Days<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caindelhiindia.com\/blog\/compulsory-itc-reversal-for-non-payment-within-180-days\/#Re-availing_of_Reversed_%E2%80%93_which_Input_tax_credit_previously_reversed\" title=\"Re-availing of Reversed \u2013 which Input tax credit previously reversed\">Re-availing of Reversed \u2013 which Input tax credit previously reversed<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caindelhiindia.com\/blog\/compulsory-itc-reversal-for-non-payment-within-180-days\/#Interest_Liability_payable_us_50_of_the_CGST_Act\" title=\"Interest Liability payable u\/s 50 of the CGST Act\">Interest Liability payable u\/s 50 of the CGST Act<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caindelhiindia.com\/blog\/compulsory-itc-reversal-for-non-payment-within-180-days\/#Common_Scenarios_Applicable_Interest_us_50_of_the_CGST_Act\" title=\"Common Scenarios &amp; Applicable Interest u\/s 50 of the CGST Act\">Common Scenarios &amp; Applicable Interest u\/s 50 of the CGST Act<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caindelhiindia.com\/blog\/compulsory-itc-reversal-for-non-payment-within-180-days\/#Reporting_in_GST_Returns\" title=\"Reporting in GST Returns\">Reporting in GST Returns<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Conditions_to_Avail_Input_tax_credit_%E2%80%93_Section_162\"><\/span><span style=\"color: #000080;\">Conditions to Avail Input tax credit \u2013 Section 16(2) \u00a0:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Input tax credit conditions under GST must comply with before claiming Input tax credit, based on Section 16 of the CGST Act, 2017,\u00a0<span style=\"color: #000080;\">Eligibility to Claim Input tax credit &#8211; <\/span>Who can claim Input tax credit : Only a registered person (not under Composition Scheme) using goods\/services for business purposes. Input tax credit is credited to the Electronic Credit Ledger after all conditions are fulfilled. (Section 16(1)).<\/p>\n<p>(a) Possession of Valid Documents \u2013 Rule 36<\/p>\n<ul>\n<li>Tax invoice by supplier.<\/li>\n<li>Self-invoice under RCM.<\/li>\n<li>Debit note.<\/li>\n<li>Bill of Entry (for imports).<\/li>\n<li>ISD invoice (Input Service Distributor).<\/li>\n<\/ul>\n<p>Note : Rule 36(4): Input tax credit is available only if the invoice appears in GSTR-2B (linked to supplier&#8217;s GSTR-1\/IFF). And Invoice must contain GSTINs of both parties, Description, value, tax amount , Place of supply (for inter-state).<\/p>\n<p>(b) Receipt of Goods or Services<\/p>\n<ul>\n<li>Physical or deemed receipt is essential.<\/li>\n<li>Delivery to a third party on recipient\u2019s instruction qualifies.<\/li>\n<li>For services, even indirect receipt (on behalf) is acceptable.<\/li>\n<\/ul>\n<p>(c) Tax Must Be Paid to Government \u2013 Section 41<\/p>\n<ul>\n<li>Supplier must have paid tax to the government.<\/li>\n<li>If tax unpaid by supplier: Input tax credit must be reversed with interest.<\/li>\n<li>Can reclaim Input tax credit later when tax is paid.<\/li>\n<\/ul>\n<p>(d) GSTR-3B Filing : Recipient must file GSTR-3B for the period of Input tax credit claim.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Additional_Conditions_to_Know_about_ITC\"><\/span><span style=\"color: #000080;\">Additional Conditions to Know\u00a0 about ITC\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Goods in Lots\/Installments: Input tax credit only after last lot received.<\/li>\n<li>180-Day Rule (Rule 37): If supplier unpaid beyond 180 days (incl. tax), Input tax credit must be reversed with interest. Can be reclaimed post-payment.<\/li>\n<li>No Double Benefit \u2013 Section 16(3): Input tax credit not allowed on capital goods if GST is included in depreciation under Income Tax.<\/li>\n<li>Time Limit to Claim Input tax credit \u2014Section 16(4) Earliest of\u00a0 30th November of the subsequent FY, or Date of filing Annual Return (GSTR-9)<\/li>\n<li>Blocked ITC \u2013 Section 17(5) &amp; Rule 36(3) : Input tax credit disallowed on Personal use, Motor vehicles (unless for transport business), Free samples, Works contract for immovable property, and membership clubs, fitness centers. Rule 36(3): No Input tax credit on tax paid due to fraud, willful misstatement, or suppression.<\/li>\n<\/ul>\n<h3 class=\"\" data-start=\"630\" data-end=\"662\"><span class=\"ez-toc-section\" id=\"Input_tax_credit_Reversal_Scenarios\"><\/span><span style=\"color: #000080;\">Input tax credit Reversal Scenarios<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"\" data-start=\"664\" data-end=\"732\">Input tax credit is required to be reversed in various situations, including:<\/p>\n<ul data-start=\"734\" data-end=\"1063\">\n<li class=\"\" data-start=\"734\" data-end=\"838\">\n<p class=\"\" data-start=\"736\" data-end=\"838\">Non-payment to suppliers within 180 days from the date of invoice [Section 16(2), second proviso].<\/p>\n<\/li>\n<li class=\"\" data-start=\"839\" data-end=\"935\">\n<p class=\"\" data-start=\"841\" data-end=\"935\">Inputs or input services used for exempted or non-business purposes [Section 17(1) &amp; (2)].<\/p>\n<\/li>\n<li class=\"\" data-start=\"936\" data-end=\"1019\">\n<p class=\"\" data-start=\"938\" data-end=\"1019\">Change in business structure (e.g., demerger, sale, or transfer of business).<\/p>\n<\/li>\n<li class=\"\" data-start=\"1020\" data-end=\"1063\">\n<p class=\"\" data-start=\"1022\" data-end=\"1063\">Loss, theft, or destruction of goods.<\/p>\n<\/li>\n<\/ul>\n<p class=\"\" data-start=\"1065\" data-end=\"1127\">These reversals are to be disclosed as follows in GSTR-3B Table 4(B)(1): For permanent reversals (non-reclaimable). and Table 4(B)(2): For temporary reversals (reclaimable once conditions are satisfied).<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Compulsory_Input_tax_credit_Reversal_for_Non-Payment_within_180_Days\"><\/span><span style=\"color: #000080;\"><strong>Compulsory Input tax credit Reversal for Non-Payment within 180 Days<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>If a registered person avails Input tax credit on inward supplies (excluding those under the reverse charge mechanism) but fails to pay the supplier the value of the supply, either wholly or partly, along with the applicable tax within 180 days from the invoice date, they must reverse the proportionate Input tax credit amount corresponding to the unpaid portion. This reversal under Goods and Services Tax should be made while furnishing the Goods and Services Tax return in FORM GSTR-3B for the tax period immediately following the 180-day period.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Re-availing_of_Reversed_%E2%80%93_which_Input_tax_credit_previously_reversed\"><\/span><span style=\"color: #000080;\"><strong>Re-availing of Reversed \u2013 which Input tax credit previously reversed<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Once the Goods and Services Tax payment is made to the supplier, the registered person is entitled to re-avail the Input tax credit that was previously reversed. Notably, the time limit specified in section 16(4) of Central Goods and Services Tax Act, 2017 does not apply to such re-availment. \u200b<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Interest_Liability_payable_us_50_of_the_CGST_Act\"><\/span><span style=\"color: #000080;\"><strong>Interest Liability payable u\/s 50 of the CGST Act<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Interest is payable u\/s 50 of the Central Goods and Services Tax Act, 2017 on the amount of Input tax credit under Goods and Services Tax reversed due to non-payment. The interest is calculated from the date of availing the credit until the date of reversal.<\/p>\n<ul>\n<li>Interest on Delayed Payment of Tax (Section 50(1)) : If a registered person fails to pay the tax due within the prescribed period, they shall be liable to pay interest at 18% per annum on the amount of unpaid tax. Interest starts from: The due date of payment till the actual date of payment. And interest is applicable even if: Return is filed late, but tax is paid voluntarily.<\/li>\n<li>Interest on Wrongful Availment and Utilization of Input tax credit (Section 50(2)): If a person wrongfully avails and utilizes input tax credit, interest is payable at 24% per annum on the wrongly availed and utilized amount. Interest applies only when both availed and utilized, not just on availment. As per the Finance Act, 2022, this section was amended retrospectively from 1 July 2017, confirming that interest is only applicable when ITC is utilized (not merely availed).<\/li>\n<li>Interest on Late Reversal of Input tax credit (Rule 37 scenarios) (Section 50(3)) : In cases like non-payment to the supplier within 180 days, where ITC is reversed as per Rule 37: Interest is payable from the date of availing the ITC to the date of reversal. And Rate of interest: 18% per annum.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Common_Scenarios_Applicable_Interest_us_50_of_the_CGST_Act\"><\/span><span style=\"color: #000080;\">Common Scenarios &amp; Applicable Interest u\/s 50 of the CGST Act<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<table>\n<thead>\n<tr>\n<td>Situation<\/td>\n<td>Applicable Interest Rate<\/td>\n<td>Interest Period<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Late payment of output GST<\/td>\n<td>18%<\/td>\n<td>From due date to actual payment date<\/td>\n<\/tr>\n<tr>\n<td>Wrongful availment and utilization of ITC<\/td>\n<td>24%<\/td>\n<td>From date of utilization to date of reversal\/payment<\/td>\n<\/tr>\n<tr>\n<td>Reversal of ITC (e.g., under Rule 37)<\/td>\n<td>18%<\/td>\n<td>From date of availment to date of reversal<\/td>\n<\/tr>\n<tr>\n<td>Late filing of GSTR-3B (even if tax paid later)<\/td>\n<td>18%<\/td>\n<td>From due date to actual filing\/payment<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>GST Clarifications : CBIC Circular No. 186\/18\/2022-GST clarified that interest under Section 50(3) is payable only when wrongly availed ITC is utilized. And Self-assessment liability must include computation of interest under Section 50 in Form GSTR-3B. In cases of partial payment, Input tax credit reversal is required proportionately to the unpaid amount. and\u00a0 The provisions of Rule 37 do not apply to supplies where tax is payable under the reverse charge mechanism.<\/p>\n<p><strong><span style=\"color: #000080;\">Additional Clarifications:<\/span> <\/strong>Deemed Payments: Supplies made without consideration, as specified in Schedule I of the Central Goods and Services Tax Act, 2017, and any amount added in the section 15(2)(b) of Central Goods and Services Tax Act, 2017 are deemed to have been paid for the purposes of provisions of Rule 37. \u200b<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Reporting_in_GST_Returns\"><\/span><span style=\"color: #000080;\"><strong>Reporting in GST Returns<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>GSTR-3B: The reversal of Input tax credit should be reported in Table 4B(2) of GSTR-3B.\u200b<\/li>\n<li>GSTR-9 (Annual Return): Such reversals are to be disclosed in Table 7A of GSTR-9. \u200b<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Conditions to Avail Input tax credit \u2013 Section 16(2) \u00a0: Input tax credit conditions under GST must comply with before claiming Input tax credit, based on Section 16 of the CGST Act, 2017,\u00a0Eligibility to Claim Input tax credit &#8211; Who can claim Input tax credit : Only a registered person (not under Composition Scheme) using &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[933],"tags":[1173],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/9008"}],"collection":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/comments?post=9008"}],"version-history":[{"count":4,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/9008\/revisions"}],"predecessor-version":[{"id":9011,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/9008\/revisions\/9011"}],"wp:attachment":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/media?parent=9008"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/categories?post=9008"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/tags?post=9008"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}