Summary:
Rule 37A is applicable if for a particular Invoice/Debit Note, Supplier has duly filed GSTR-1 (along with details of such invoice/debit note) but not its GSTR-3B for that period. Also, Buyer has availed credit based upon its GSTR-2B (auto populated from such GSTR-1 filed by the Supplier).
| Heading | Reversal of Credit (Required or Not) |
| If Supplier files the said GSTR-3B on or before 30Th September following the end of FY in which the ITC was availed by the buyer | Buyer is not required to Reverse the Credit availed by it |
| If Supplier do not file the said GSTR-3B on or before 30Th September following the end of FY in which the ITC was availed by the buyer | Buyer is required to Reverse the Credit availed by it –in its GSTR-3B filed on or before 30th November (i.e. GSTR-3B of October Month). If Not done within 30th November, then ITC amount need to be paid along with interest. However, Buyer can re-avail the ITC when the said GSTR-3B is filed by Supplier |
[Rule 37A. Reversal of input tax credit in the case of non-payment of tax by the supplier and re-availment thereo.- 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: Provided 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. Provided further that 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.]
Date of Applicability of Rule 37A:
The effective date of applicability of Section 41 is w.e.f 01-10-2022. Though its corresponding rule i.e. Rule 37A got notified on 26-12-2022, Rule 37A would still be applicable from 01-10-2022 onwards.
Rate of Interest for Reversal of ITC:
Rule 37A prescribe for payment of interest u/s 50 of CGST Act on reversal of ITC. As per amended provision of Section 5 {vide N/no 09/2022(CT) dt 05.07.2022}
Quote:
Section 5(3): Where the input tax credit has been wrongly availed and utilised, the registered person shall pay interest on such input tax credit wrongly availed and utilised, at such rate not exceeding twenty-four per cent. as may be notified by the Government, on the recommendations of the Council, and the interest shall be calculated, in such manner as may be prescribed]
Important Point:
- Currently, Interest @ 18% per annum will be applicable where ITC has been availed and utilised.
- If ITC has been availed but not utilised, the interest need not to be paid by the buyer/recipient.
Reclaiming of ITC reversed under Rule 37A :
As per the proviso to the rule the buyer is eligible for reclaiming of ITC when the supplier filed its GSTR-3B for corresponding period of tax invoice / debit note.
Important Point:
1.Method of re-availment along with Disclosure in GSTR-3B by Buyer.
If Buyer Reverse the ITC prior to 30th November and subsequently supplier file GSTR-3B:
- Under this circumstances buyer need to Reverse the ITC in Table 4(B)(2) of GSTR-3B
- After filling of GSTR-3B by supplier, the buyer can re-avail the same in Table 4(A)(5) but the same need to be additionally disclosed in Table 4(D)(1) of GSTR-3B.
If Buyer did not reverse the ITC prior to 30th November and subsequently supplier file GSTR-3B:
- Since the buyer does not reverse the ITC prior to 30th November, the only recourse available is to pay the ITC along with Interest. No need to reverse the same in table 4(B).
- When Supplier files its GSTR-3B, then Buyer can directly re-avail the same in GSTR-4(A)(5). No need to disclose in Table 4(D)(1) since the same was not reversed in Table 4(B)(2).
2.The time limit for availing of ITC as per Section 16(4) will not be applicable on reclaiming of ITC. Meaning thereby no time limit is available for reclaiming of ITC. It can be claim at any time when supplier files the GSTR-3B.
This Article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update etc. if any.
