Section 16(d), payment within 180 days

This discussion clarifies Section 16(d) of the GST Act regarding Input Tax Credit (ITC) when payment to a contractor exceeds 180 days. If the advance paid to the contractor is more than the outstanding liability, ITC generally does not need to be reversed. However, if advances and liabilities relate to different goods or services, or are treated separately in accounting, reversal of ITC may be required. The interpretation of this provision can vary across the industry.