Rule Reference
Rule 37A - Reversal of input tax credit in the case of non-payment of tax by the supplier and re-availment thereof(Inserted via Notification No. 26/2022 - Central Tax, dated 26.12.2022)
Rule 37A requires a registered person (recipient of goods/services) to reverse the Input Tax Credit (ITC) they have availed if the supplier has not filed their GSTR-3B return for the tax period related to that ITC, by 30th September following the end of the financial year.
However, once the supplier files the pending GSTR-3B later, the recipient is allowed to re-avail the same ITC in any future GSTR-3B return.
- You claim ITC on an invoice or debit note in your GSTR-3B, and the supplier has also reported that invoice in GSTR-1 or IFF.
- But the supplier does not file their GSTR-3B for that tax period (which is necessary for tax payment).
- If the supplier does not file GSTR-3B by 30th September following the end of that financial year, then:
You must reverse the ITC in your GSTR-3B filed on or before 30th November of that year.
- If you fail to reverse it by 30th November, the ITC amount becomes payable along with interest under Section 50 of the CGST Act.
- Later, if the supplier files the pending GSTR-3B, you are allowed to re-avail the ITC in any future GSTR-3B return.
Let's take an example based on Financial Year 2024-25 (April 1, 2024 to March 31, 2025):
|
Event |
Date |
Action |
|
Invoice issued by supplier |
May 15, 2024 |
Supplier issues invoice to you |
|
Supplier reports invoice in GSTR-1 |
May-24 |
You can see it in GSTR-2B |
|
You claim ITC |
June 2024 (May GSTR-3B) |
You avail ITC in your GSTR-3B return |
|
FY 2024-25 ends |
March 31, 2025 |
The relevant financial year closes |
|
Supplier fails to file GSTR-3B for May |
Till September 30, 2025 |
ITC remains unsupported due to non-filing by the supplier |
|
You reverse the ITC |
On or before November 30, 2025 |
Mandatory reversal required under Rule 37A |
|
You don't reverse the ITC |
After November 30, 2025 |
You are liable to pay that amount along with interest |
|
Supplier eventually files GSTR-3B |
December 10, 2025 |
Now tax is considered paid by supplier |
|
You re-avail ITC |
December 2025 or later |
You can take ITC again in your next GSTR-3B |
Key Compliance Points
- Monitor supplier GSTR-3B filing status if you're availing ITC.
- Reverse ITC before 30th November, if the supplier hasn't filed GSTR-3B by 30th September.
- Pay interest if reversal is delayed beyond the deadline.
- Re-avail ITC when the supplier eventually files their return.
Final Note
Rule 37A places responsibility on recipients to track supplier compliance, ensuring that ITC is only retained when the corresponding tax has actually been paid by the supplier through GSTR-3B. This rule helps prevent wrongful credit and ensures more accurate and compliant ITC claims.
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