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.
The Council recommended to insert 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.
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.
Rule 37(1) as in existence before the date 01.10. 2022 specified that only the amount proportionate to the invoice value which does not pay after 180 days period is needed to be summed.
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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