GSt on bad debt

When a customer does not pay and you write off the amount as bad debt, the GST you already remitted on that supply is not reversed or recoverable. India GST does not have a bad debt relief provision, once you have remitted GST on a taxable supply, you cannot claim it back if the buyer later defaults.

The scenario where GST adjustment does apply is from the buyer side: under Rule 37, a registered buyer who claimed ITC on an invoice must reverse that ITC if they have not paid the supplier within 180 days. But this is the buyer reversing their own ITC, the seller is not involved.

So for the seller writing off a bad debt: no additional GST liability arises, and no GST refund is available either. The write-off is purely an accounting treatment.

One thing to keep in mind: if you raised the invoice and reported it in GSTR-1, that GST was due at point of supply regardless of whether the customer paid. A credit note under Section 34 is only valid for specific reasons (price change, goods return, deficient services), non-payment alone does not qualify for a credit note.

If the confusion is around ITC mismatch notices related to supplier payment timelines rather than bad debt write-offs, this guide covers the distinction in detail: [ITC reconciliation pain points for SMEs under GST 2.0](https://taxgarden.in/blog/gst-2-itc-reconciliation-sme-pain-points-2026)