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Section 16(d), payment within 180 days

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santwana gautam

46 Points Posted on 28 April 2023

recipient fails to pay his contractor (liability)even after 180 days however advance with the contractor is more than the liability .Will the ITC b reversed

Replies (2)

Quick Summary

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.

Pankaj Rawat

GST Practitioner

29904 Points Posted on 28 April 2023

No... Section 16(2) for 180 days applicable on outstanding. not required to reverse.

CA SANDESH MAHIPAL

Practicing in GST and MSME

1149 Points Posted on 28 April 2023

If advance and liability are different i. e. for diff diff goods or services or have been treated separately in books, as per my view, ITC is required reversal.
Although this provision applicability is little ambiguous industry wide, people interpret differently.

Regards