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ITC Reversal for Non Payment within 180 days

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sathya kumar s

Accountant

172 Points Posted on 12 June 2023

One Registered taxpayer have claimed ITC for FY 2018-19 but failed to pay for the same within 180 days of issue of invoice to the supplier. He also not reversed the said ITC in form GSTR 3B. But Subsequently after around 300 days of issue of invoice he paid full amount along with tax to the supplier. Now during inspection GST Department noted this and sent notice for Reversal of Full ITC with interest for Non Payment within 180 Days.

Now My question is do the taxpayer need to reverse the entire ITC along with interest now or only he is supposed to pay the interest for 300 days of delay ?

Replies (2)

Quick Summary

A taxpayer claimed Input Tax Credit (ITC) for FY 2018-19 but failed to pay their supplier within the stipulated 180 days. They also neglected to reverse this ITC in their GSTR-3B. Although payment was eventually made around 300 days later, the GST department has issued a notice demanding full ITC reversal with interest due to the initial non-compliance. The core question is whether the entire ITC must be reversed or if only interest for the delay is applicable.

B Durga Prasad

Student

125 Points Posted on 13 June 2023

The taxpayer failed to pay for the claimed Input Tax Credit (ITC) within 180 days and did not reverse the ITC in Form GSTR-3B. Subsequently, after around 300 days, the taxpayer paid the full amount along with tax to the supplier. The GST Department has issued a notice for the reversal of the full ITC with interest for non-payment within 180 days.

Based on the information provided, it appears that the taxpayer would be required to reverse the entire ITC claimed along with interest for the period of delay. The interest would be applicable for the duration from the date the payment was due (180 days from the issue of the invoice) until the actual payment was made (around 300 days from the issue of the invoice).
To learn more about Form GSTR-3B Return Filing Procedure click here
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