ITC reversal: Rule 37 (180-day payment) and Rule 37A (supplier did not pay)

When ITC must be reversed because the supplier was not paid within 180 days (Rule 37), or because the supplier did not file GSTR-3B by 30 September/30 November (Rule 37A), and how it is re-claimed.

Rule 37: non-payment to the supplier within 180 days

• If the recipient does not pay the supplier the value plus tax within 180 days from the invoice date, the proportionate ITC must be reversed in GSTR-3B (Table 4(B)(2)) with interest under Section 50.
• When payment is later made, the ITC can be re-availed.
• Exceptions include supplies on which tax is payable under reverse charge, and deemed supplies without consideration under Schedule I.

Rule 37A: supplier has not filed GSTR-3B

• If ITC was availed on an invoice furnished by the supplier in GSTR-1/IFF, but the supplier has not filed GSTR-3B for that period by 30 September of the following financial year, the recipient must reverse the ITC on or before 30 November of that year.
• It can be re-claimed after the supplier files the return.

Practice tip

Keep a creditor ageing report flagging bills older than about 150 days, and a supplier filing-status check in your monthly reconciliation.