GST
Part payment and proportionate reversal
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Facts
No. Rule 37 requires reversal only of ITC proportionate to the unpaid amount.
Provisions and law
- Rule 37, CGST Rules 2017If the supplier is not paid within 180 days of the invoice, the proportionate ITC is shown as reversed in the GSTR-3B for the tax period immediately after the 180 days, with interest under Sec 50; it is re-availed once payment is made. Not applicable to reverse charge supplies, and to deemed supplies without consideration.
Analysis
On an invoice of ₹2,36,000 with ₹36,000 GST, if ₹1,18,000 is unpaid after 180 days, half the credit, ₹18,000, is reversed. When the balance is paid, the ₹18,000 is reclaimed. Keep a clear payment allocation so the proportion is not in doubt.
Conclusion
- Compute unpaid amount of the invoice after 180 days.
- Find the unpaid percentage.
- Reverse the same percentage of the ITC.
- Reclaim when the balance is paid.
A Savvy can do this for you
ITC reversal for unpaid suppliers after 180 days, Rule 37
₹1,999
Get this doneAsk a Savvy on WhatsAppGeneral guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.