Reverse of ITC for nonpayment

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This discussion clarifies the process for reversing Input Tax Credit (ITC) when a customer fails to make payment. The consensus is that the buyer is responsible for reversing ITC and paying the GST via Form DRC-03, especially if payment isn't received within 180 days. While suppliers have paid GST to the government, recovering dues from the non-paying customer remains their responsibility, and GST officers may not directly intervene in this recovery process.

ARUN GUPTA

ARUN GUPTA (Querist)
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14 September 2021 We sold goods to a party in 2018-2019.The party did not make the payment to us. How can we reverse ITC OF the party? What is the process?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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14 September 2021 Only the buyer has to reverse ITC and pay GST through DRC 03.

ARUN GUPTA

ARUN GUPTA (Querist)
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15 September 2021 Can gst officers force buyer to reverse the ITC? IS THERE ANY TIME LIMIT TO REVERSE THE ITC?

ARUN GUPTA

ARUN GUPTA (Querist)
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15 September 2021 WE INFORMRD GST OFFICERS ALSO REGARDING NON PAYMENT BUT THEY ARE NOT TAKING ANY ACTION ON BUYER NOR DIRECTING HIM TO REVERSE THE ITC.

ARUN GUPTA

ARUN GUPTA (Querist)
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15 September 2021 What are the rules for reversal of ITC for non payment in Gst?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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15 September 2021 Reversal of ITC required in case of non payment within 180 days. Inform commissioner of GST.

ARUN GUPTA

ARUN GUPTA (Querist)
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15 September 2021 We informed Commissioner of gst but no action initiated. We informed them after 1 year of sale and issue of goods.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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15 September 2021 Inform next higher official.

ARUN GUPTA

ARUN GUPTA (Querist)
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15 September 2021 They say in have to book in my return

Udaya Chandran

Udaya Chandran (Expert)
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15 September 2021 This is not ITC to the supplier. This is a liability of the supplier who paid the GST to the government from his pocket because non receipt of the payment from the customer for the supplies made.

ARUN GUPTA

ARUN GUPTA (Querist)
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15 September 2021 They say I have to book in my return.

ARUN GUPTA

ARUN GUPTA (Querist)
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15 September 2021 Not cleared about ITC TO the supplier

ARUN GUPTA

ARUN GUPTA (Querist)
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Udaya Chandran

Udaya Chandran (Expert)
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15 September 2021 I said that you need not to worry about ITC. Since you've already paid GST to the Government and the customer didn't pay within 180 days from the date of invoice, he only has to reverse the ITC. It is your duty to collect the value of supplies including GST from your customer. I hope you're cleared now.

ARUN GUPTA

ARUN GUPTA (Querist)
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15 September 2021 Yes but my customer is not paying my dues which includes gst also which Is paid to government. How will I recover my dues?

Udaya Chandran

Udaya Chandran (Expert)
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15 September 2021 To tell you the fact, it is the supplier's headache. Government has no play in this part.

ARUN GUPTA

ARUN GUPTA (Querist)
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15 September 2021 You mean my party won't be required to reverse ITC .

ARUN GUPTA

ARUN GUPTA (Querist)
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15 September 2021 Pl clear whether Party will be required to reverse ITC OR NOT?