CA Roopa Nayak
Quick Summary
Table of Contents Background ITC reversal on non-payment towards vendor invoices within 180 days-proviso/ rule and changes therein Authors Comments Relevant decision in the context of the said proviso Analysis and conclusion Conclusion Background Under the GST law, th
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FAQ :
GST Rule 37 outlines the process for reversing Input Tax Credit (ITC) when a registered person fails to pay the value of supply plus tax to their vendor within 180 days from the invoice date.
If payment is not made within 180 days of the invoice date, the business must reverse the ITC availed on those supplies, along with applicable interest.
Yes, a business is entitled to re-avail the ITC once the payment for the supply and tax is made to the supplier.
The rule generally applies to most supplies. However, it's noted that the 180-day payment rule is not applicable to Reverse Charge Mechanism (RCM) cases where the recipient is liable to discharge the tax.
From 1st October 2022, amendments clarified that payment should be proportionate to the amount not paid to the supplier, and the reversal of ITC should be done along with interest.
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