DEBTORS NOT PAYING FOR MORE THAN 180 DAYS

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RAJA P M ("Do the Right Thing...!!!") (127140 Points)
Replied 26 January 2020

@ Mr RAMAPRASAD.,

for last question...
- As per GST if payment not paid then ITC will reversible. Here no more questions for who is reverse ITC...

Now.,

You / We don't think about the Customer's activities... But, If Supplier can prepare credit and its shown in GSTR 1 return then ITC value automatically down in GSTR 2A.
So, here Your requirement is matter...

Anup Agarwal (1184 Points)
Replied 26 January 2020

Mr. Ramaprasad,
It is under law that if recipient does not make payment to it's supplier within 180 days, he must have to reverse ITC.

CA Kiran Sutrave (CA) (428 Points)
Replied 27 January 2020

According to me, the point of raising a GST invoice is on "supply of services". Since the supply has already happened, the GST liability arises. The reversal for non-payment to Creditor within 180 days from the date of the invoice is to be done by the buyer himself and can be reclaimed once the payment is done to the Creditor. I am not sure of the adjustment (issuing credit note) mentioned by the member. What happens when the buyer has used/processed the goods for manufacturing other goods?

CA Kiran Sutrave (CA) (428 Points)
Replied 27 January 2020

vishal (Accounts) (35 Points)
Replied 19 February 2020

This ia a common complaint by several small SMEs / Service providers ; who are often at the mercy of such unscrupulous corporate customers. They regular credit term is not adhered to & unfortunately; since the suppliers dont have upper hand; they have to depend on whenever the customer makes payment. One of my business has several lakhs outstanding by a reputed bank and there is no dispute pertaining to the outstanding amt It just that they make delayed payments. I also know that the client will make payment; but it shall be delayed. by 2-3 months overdue. But the fact remains that i have to pay GST in the subsequent month of invoice ; but recover my money 4-5 months later. This blocks my cash flow & not to mention; accounting issues - which again is a major pain. I cant even stop my services; since its a reputed client and a strong brand name to have.

Like in TDS; i feel that the GST amt should be deducted at source - atleast for corporate customers.

K.Rangarajan (retired Zonal commercial manager) (22 Points)
Replied 03 March 2020

If the payment is overdue 180 days or more, one should file a legal case and based on which can claim tax back with a due information to the party concerned about your action. Once the recovery is completed, the tax claimed may be repaid to the deartment.