Every registered person shall be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business provided following conditions are satisfied
-he is in possession of a tax invoice
-he has received the goods or services or both.
Explanation: Generally, when we purchase any goods or receive any service related to our business, we take ITC as we are in possession of Invoice and we used the goods/service in our business.
Rule 37 of CGST Rules:
This rule implies that when a registered person who has availed ITC could not pay the invoice amount to the supplier within the time period of 180 days then it led to the reversal of ITC and if a part of invoice is paid then ITC will be reversed on proportionate basis.
Note:
1. ITC reversed can be re availed on payment of Invoice.(Third proviso to Sec. 16(2)
2. ITC reversal here means, an amount equal to ITC availed shall be added to the output tax liability along with interest there on. (Second proviso to Sec. 16(2)
3. interest @ 18% shall be paid starting from the date of availing credit on such supplies till the date when the amount added to the output tax liability. (sub-section (1) of section 50)
4. The said rule is not applicable in case of ITC claimed under RCM. (Second proviso to Sec. 16(2)
Example:
XYZ Pvt Ltd has a turnover of Rs.1.00 cr during the Fy 2018-19. purchased goods/received services as under.
| S.No | Date of Purchases | Particulars | Date of Payment |
| 1. | 01.04.2018 | Goods worth (1000000+180000) | 01.05.2018 |
| 2. | 20.05.2018 | Goods worth (2000000+360000) | 20.06.2019 |
| 3. | 21.07.2018 | Goods worth (2500000+450000) | 05.07.2018 |
| 4. | 20.08.2018 | Freight paid Rs.500000and RCM paid 25000 | Unpaid |
| 5. | 21.08.2018 | Goods worth (3000000+540000) | 01.03.2019 |
Calculate Tax liability for the year 2018-19 to be filed under GSTR9?
Sol:
Calculation of Output Tax
| S.No | Particular | GST | Remark |
| 1. | Outward Supply Rs.1.00 cr | 1800000 | Output liability |
| 2. | Goods purchased on 20.05.2018 | 360000 | ITC must have been taken in the return for the month May and need to be reversed while filing return for the month Nov |
| 3. | Goods purchased on 21.08.2018(3000000+540000) | 540000 | ITC must have been taken in the return for the month August and need to be reversed while filing return for the month Feb |
| Out Put liability | 2700000 | ||
Calculation of ITC
| S.No | Particular | GST | Remark |
| 1. | Goods purchased on 01.04.2018(1000000+180000) | 180000 | Paid within 180 days |
| 2. | Goods purchased on 20.05.2018(2000000+360000) | 360000 | First credit has been taken and then reversed. |
| 3. | Goods purchased on 21.07.2018 (2500000+450000) | 450000 | Paid in advance |
| 4. | Freight paid Rs.500000 and RCM paid 25000 | 25000 | Though unpaid but input can be availed as Rule 37 NA to input availed under RCM. |
| 5. | Goods purchased on 21.08.2018(3000000+540000) | 540000 | First credit has been taken and then reversed. |
| 6. | Invoice dated 21.08.2018 paid after 180 days | 540000 | Credit taken |
| Input Credit | 2095000 | ||
Tax Payable: 605000
Interest payable:
1. Goods purchased on 20.05.2018 and ITC availed Rs. 360000
but reversed after 180days
360000 * 18% *180/365 = 31956
2. Goods purchased on 21.08.2018 and ITC availed Rs. 540000
but reversed after 180 days
540000 * 18% *180/365 = 47934
Author Bio
I have supplied goods to a customer in the month of oct 2022 for which I have already paid the output tax ( 55 K) to the govt but till today I haven’t received payment from the customer. Does anybody know if there is a way under GST to claim back the output tax paid to govt as in this case I’m incurring a loss on both sides, first from goods delivered to customer and second, GST Payment which I had paid as output tax. It would be a great help if anybody could help me out in this
Sir, Is this rule applicable on Import of Goods as well?
I have supplied goods to a customer in the month of March 2022 for which I have already paid the output tax (2 Lakhs) to the govt but till today I haven’t received payment from the customer. Does anybody know if there is a way under GST to claim back the output tax paid to govt as in this scenario I’m incurring a loss on both sides, first is the sale consideration amount from the customer and second, extra 2 lakhs which I paid as output tax. It would be a great help if anybody could help me out in this
is there any provision to maintain the proportionate input tax credit against the closing stock as per stock statement submitted in bank in every month .
pls advise
Sir,
my supplier not filling R1 and we take itc in the month of april 2018 now i want to reversal on 06.03.2021 how can we do this.
Does payment cover accounting adjustments also like if we sale and purchase with same person and only net amount paid or received. Can we avail ITC in this case without reversal
Sir I have one doubt regarding the above provision.
1) How department would know the payment details regarding the ITC claim during the said period?
2) Whether the seller ( from whom purchase is made) has any option in GST R1 or any return to show such non payment of invoice amount or due to non payment Tax liability paid to such party are reversed?
3) If I go for issue of Credit note it resulted in increase in stock, which again raise my tax liability.
how to solve this issue?
what the Consequences if forgot to reversal of itc
after 180
Freight paid Rs.500000 and RCM paid 25000. I dont understand sir. both are paid in particulars column but unpaid in date of payment column. what is the meaning……………… Though unpaid but input can be availed as Rule 37 NA to input availed under RCM………..Kindly explain sir.