Find
If you do not pay the supplier the value and tax within 180 days of the invoice date, the ITC must be reversed with interest. It can be reclaimed once you pay. Paying through banking channels also strengthens your genuineness defence.
GST
Late supplier payment and the 180-day ITC rule
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Provisions
Sec 16(2), second proviso, CGST Act 2017; Rule 37, CGST Rules 2017
Analysis
Example: invoice dated 1 March for Rs 5 lakh plus Rs 90,000 GST is unpaid on 28 August. Reverse Rs 90,000 in GSTR-3B for August, with interest at 18 percent if the credit was used. When you pay in October, reclaim it. Payment to a third party instead of the supplier, or in cash, weakens your position if the supplier is later questioned.
Close
- Run an ageing report of unpaid purchase invoices each month
- Reverse ITC on invoices crossing 180 days in GSTR-3B
- Pay interest where the credit was used
- Reclaim ITC after payment and keep the bank proof
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