Summary: Under GST Rule 37A, a registered person who has claimed Input Tax Credit (ITC) must reverse it if their supplier fails to file the corresponding GSTR-3B return by September 30th of the following financial year. This reversal must be done by November 30th of that same year. For example, for an invoice dated in May 2024, if the supplier does not file their GSTR-3B by September 30, 2025, the recipient must reverse the ITC by November 30, 2025. Failure to reverse the ITC by this deadline makes the recipient liable to pay the amount along with interest. However, if the supplier subsequently files the pending GSTR-3B, the recipient is then permitted to re-avail the reversed ITC in any future GSTR-3B return. This rule shifts the responsibility of monitoring supplier compliance to the recipient, ensuring that ITC is only retained when the tax has actually been paid by the supplier.
Rule Reference:
Rule 37A – Reversal of input tax credit in the case of non-payment of tax by the supplier and re-availment thereof
(Inserted via Notification No. 26/2022 – Central Tax, dated 26.12.2022)
Rule 37A requires a registered person (recipient of goods/services) to reverse the Input Tax Credit (ITC) they have availed if the supplier has not filed their GSTR-3B return for the tax period related to that ITC, by 30th September following the end of the financial year.
However, once the supplier files the pending GSTR-3B later, the recipient is allowed to re-avail the same ITC in any future GSTR-3B return.
1.You claim ITC on an invoice or debit note in your GSTR-3B, and the supplier has also reported that invoice in GSTR-1 or IFF.
2. But the supplier does not file their GSTR-3B for that tax period (which is necessary for tax payment).
3. If the supplier does not file GSTR-3B by 30th September following the end of that financial year, then:
4. You must reverse the ITC in your GSTR-3B filed on or before 30th November of that year.
5. If you fail to reverse it by 30th November, the ITC amount becomes payable along with interest under Section 50 of the CGST Act.
6. Later, if the supplier files the pending GSTR-3B, you are allowed to re-avail the ITC in any future GSTR-3B return.
7. Let’s take an example based on Financial Year 2024–25 (April 1, 2024 to March 31, 2025):
| Event | Date | Action |
| Invoice issued by supplier | May 15, 2024 | Supplier issues invoice to you |
| Supplier reports invoice in GSTR-1 | May-24 | You can see it in GSTR-2B |
| You claim ITC | June 2024 (May GSTR-3B) | You avail ITC in your GSTR-3B return |
| FY 2024–25 ends | March 31, 2025 | Relevant financial year closes |
| Supplier fails to file GSTR-3B for May | Till September 30, 2025 | ITC remains unsupported due to non-filing by supplier |
| You reverse the ITC | On or before November 30, 2025 | Mandatory reversal required under Rule 37A |
| You don’t reverse the ITC | After November 30, 2025 | You are liable to pay that amount along with interest |
| Supplier eventually files GSTR-3B | December 10, 2025 | Now tax is considered paid by supplier |
| You re-avail ITC | December 2025 or later | You can take ITC again in your next GSTR-3B |
Key Compliance Points:
- Monitor supplier GSTR-3B filing status if you’re availing ITC.
- Reverse ITC before 30th November, if the supplier hasn’t filed GSTR-3B by 30th September.
- Pay interest if reversal is delayed beyond the deadline.
- Re-avail ITC when the supplier eventually files their return.
Final Note:
Rule 37A places responsibility on recipients to track supplier compliance, ensuring that ITC is only retained when the corresponding tax has actually been paid by the supplier through GSTR-3B. This rule helps prevent wrongful credit and ensures more accurate and compliant ITC claims.
Author Bio
Whether CGST Rule 37A is still relevant in the context of mandatory sequential filing of GSTR3Bs and GSTR1s ?
Dear Sir,
Thanks for your query. It may be noted that sequential filing makes sure returns are filed in order. Rule 37A makes sure you only claim ITC if your supplier has actually reported the invoice.
Answer to your query:-
Yes, CGST Rule 37A is still relevant and continues to apply even with the mandatory sequential filing of GSTR-3B and GSTR-1.
While sequential filing ensures that taxpayers file their returns in chronological order (i.e., GSTR-1 cannot be filed unless the previous GSTR-3B is filed), it does not guarantee that a supplier has reported all invoices related to outward supplies.
Rule 37A specifically deals with cases where:
A recipient avails Input Tax Credit (ITC) on an invoice,
But the supplier fails to report that invoice in their GSTR-1 by 30th September of the following financial year.
In such cases, Rule 37A mandates that:
The recipient must reverse the ITC by 30th November of the following financial year.
If the supplier later reports the invoice, the recipient may re-avail the ITC.
Therefore, sequential filing ensures return discipline, while Rule 37A ensures ITC accuracy at the invoice level. Both provisions serve different purposes and are complementary, not conflicting.