The Central Government has notified the amended Central GST Rules in order to give effect to the decisions of the GST Council meeting held on 17th December 2022.
The 48th meeting of GST Council meeting headed by the Union Finance Minister Nirmala Sitharaman has decided to include a new provision in the Central GST Act where the taxpayer can reverse the input tax credit in the event of non-payment of tax by the supplier by a specified date.
The council further proposed for a mechanism for re-availment of such credit, if the supplier pays tax subsequently.
As per the decision of the Council the Central Government has inserted Rule 37A in CGST Rules, 2017 to prescribe the mechanism for reversal of input tax credit by a registered person in the event of nonpayment of tax by the supplier by a specified date and mechanism for re-availment of such credit, if the supplier pays tax subsequently.
This would ease the process for complying with the condition for availment of input tax credit under section 16(2)(c) of CGST Act, 2017.
As per the new rule, 37A, “where input tax credit has been availed by a registered person in the return in FORM GSTR-3B for a tax period in respect of such invoice or debit note, the details of which have been furnished by the supplier in the statement of outward supplies in FORM GSTR-1 or using the invoice furnishing facility, but the return in FORM GSTR-3B for the tax period corresponding to the said statement of outward supplies has not been furnished by such supplier till the 30th day of September following the end of financial year in which the input tax credit in respect of such invoice or debit note has been availed, the said amount of input tax credit shall be reversed by the said registered person, while furnishing a return in FORM GSTR-3B on or before the 30th day of November following the end of such financial year.
However, this is subject to condition that where the said amount of input tax credit is not reversed by the registered person in a return in FORM GSTR-3B on or before the 30th day of November following the end of such financial year during which such input tax credit has been availed, such amount shall be payable by the said person along with interest thereon under section 50.
Further, where the said supplier subsequently furnishes the return in FORM GSTR-3B for the said tax period, the said registered person may re-avail the amount of such credit in the return in FORM GSTR-3B for a tax period thereafter. Under the GST law, reversal of ITC means the credit of inputs utilised earlier would now be added to the output tax liability, effectively nullifying the credit claimed earlier. Depending upon when such reversal is done, payment of interest may also be required.
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