ITC Reversal as per Rule 37A article briefly speaks on its applicability, re-availment of ITC.
In order to get entitled to any input tax credit, the taxpayer needs to satisfy all the conditions as per the section 16(2) of the CGST, 2017 and the rules made thereunder i.e. input tax credit (ITC) can be availed only if the required tax is paid by the supplier to the Government.
Rule 37A was inserted vide notification no. 26/2022- Central Tax dated 26th December 2022.
Rule 37A comes into play if in the below-mentioned circumstances
Input tax credit on invoice/ debit note is availed by the taxpayer (recipient) via return in Form GSTR-3B;
Details of the said invoice/ debit note are furnished by the supplier via a statement of outward supplies in Form GSTR-1
However, the supplier has not furnished a return in Form GSTR-3B for the said period till 30th September following the end of the financial year in which ITC in respect of invoice/ debit note has been availed.
In a simplified way, provisions of rule 37A are applicable as and when the supplier has reflected the invoice/ debit note in GSTR-1. However, the corresponding tax on the said invoice/ debit note is not paid to the Government via GSTR-3B.
ITC Reversal as per Rule 37A of the CGST, 2017
As and when provisions of rule 37A become applicable, the taxpayer needs to take any of the following actions
Particular | Action |
ITC reversal on or before 30th November | Reverse ITC on or before 30th November following the end of the financial year in which ITC is availed. Interest will not be payable for ITC reversed on or before 30th November |
ITC reversal after 30th November | Reverse ITC after 30th November following the end of the financial year in which ITC is availed. Additionally, the taxpayer will be liable to pay interest under section 50 of the CGST Act, 2017. |
Re-availment of ITC
As per the second proviso to rule 37A, the reversed ITC can be re-availed by the recipient as and when the supplier furnishes the return in Form GSTR-3B for the said tax period.
Thus, once the pending tax on the respective invoice/debit note is deposited by the supplier, ITC on the same can be availed by the recipient.
ITC Reversal as per Rule 37A under GST
ITC is to be reversed by the recipient when all the following circumstances are satisfied
The recipient has availed ITC on invoice/ debit note in GSTR-3B
Details of the said invoice/ debit note are furnished by the supplier in GSTR-1
Supplier has not furnished GSTR-3B of the relevant tax period i.e. tax is not deposited by the supplier to the Government.
ITC re-availment under rule 37A
ITC can be re-availed by the recipient, on furnishing of GSTR-3B return by the supplier.
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