Answer

1. F

   Facts

   Retention money is part of the invoice value still unpaid. If it stays unpaid after 180 days, the proportionate ITC must be reversed under Rule 37.

2. P

   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.
   • Sec 16(2), third proviso, CGST Act 2017The recipient is entitled to avail the credit again once payment of value and tax is made to the supplier.
3. A

   Analysis

   On a ₹11,80,000 bill with 10 percent retained, ₹1,18,000 is unpaid. The ITC on that part, about ₹18,000, is reversed after 180 days and reclaimed when retention is released. Some businesses ask contractors to invoice the retention separately when due, which avoids the reversal. Agree on this in the contract.

4. C

   Conclusion

   1. 1Identify retention amounts in contractor bills.
   2. 2Reverse proportionate ITC after 180 days.
   3. 3Reclaim on release of retention.
   4. 4Consider invoicing retention separately in future contracts.

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