180-day ITC rule calculator

FAQ

Questions people ask

What is the 180-day rule?

If you don't pay a supplier the value of the supply and the tax within 180 days from the invoice date, you must reverse the input tax credit on it, with interest under section 50. This is section 16(2), second proviso, and rule 37.

Do I reverse all of it?

Only the part that matches what you haven't paid. If you've paid half the invoice, you reverse half the credit.

Where do I show the reversal?

In the GSTR-3B for the tax period immediately following the 180 days from the invoice date.

Can I take the credit back?

Yes. When you pay the supplier the value and the tax, rule 37(2) lets you re-avail the credit. The section 16(4) time limit doesn't apply to that, but interest already paid is not refunded.

Does it apply to reverse charge?

No. Rule 37 excludes supplies on which tax is payable on reverse charge. Supplies without consideration listed in Schedule I are treated as paid.

How is interest worked out here?

At 18% a year, simple, from the date you took the credit to the date you reverse it. That is the upper figure. Whether credit you never used attracts interest is argued about, so check with your CA.