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ITC reversal for 180 days non-payment calculator 2026

A supplier invoice left unpaid for 180 days costs you the input tax credit on it. Enter the invoice, what was paid and when, and get the credit to reverse, the return it belongs in, the interest under Section 50, and how much comes back when you finally pay — Rule 37 as it stands on 1 October 2026, with Rule 37A alongside.

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What kind of supply is the invoice for?

Two kinds of supply never reach the 180-day test

The invoice and what was paid

Date of issue of the invoice

The 180 days run from the invoice date — not from the date of receipt of goods or the date you took the credit.

Invoice total — value plus GST (₹)

The test is payment of the value of supply along with the tax on it, so use the full invoice amount.

ITC availed on this invoice (₹)

Only the credit actually taken in GSTR-3B. Blocked or ineligible tax that was never claimed stays out.

Paid to the supplier within 180 days (₹)

What had actually been paid against this invoice — value and tax together — by day 180.

Interest and re-availment

Was this credit utilised before you reversed it?

Rule 88B treats credit as utilised once the electronic credit ledger balance falls below the amount in question

Date of utilisation

Where the balance fell on paying tax through a return: the due date of that return or its actual filing date, whichever is earlier.

Date of reversal

The date the GSTR-3B carrying the reversal is filed, or the date of payment through DRC-03.

Paid to the supplier after the reversal (₹) — optional

Enter what has since been paid against the unpaid balance to see how much credit comes back.

Rule 37A — the other reversal, when the supplier does not pay the tax

TriggerYour supplier reported the invoice in GSTR-1 or the IFF (so the credit reached your GSTR-2B and you took it), but has not filed the GSTR-3B for that tax period by 30 September following the end of the financial year in which you availed the credit.

What you doReverse that credit in a GSTR-3B filed on or before 30 November following the end of that financial year.

InterestNone if you reverse by 30 November. If you do not, the amount becomes payable with interest under Section 50.

Getting it backWhen the supplier later files the GSTR-3B for that period, you may re-avail the credit in a GSTR-3B for any tax period thereafter.

Rule 37 is about you not paying the supplier; Rule 37A is about the supplier not paying the Government. Rule 37A carries fixed calendar dates and no proportion, so it needs a supplier-wise filing-status check each October rather than a calculation.

Why this matters in audit

The 180-day rule is audited from the creditors ageing

Every forward-charge creditor older than 180 days at the balance sheet date is a candidate reversal. Auditors test it by running the payables ageing against credit taken, invoice by invoice — the same working CORAA builds from the ledger.

Reversing for exempt supplies instead? Use the Rule 42 & 43 calculator — or work out interest on other defaults with the GST interest calculator.

How the 180 days ITC reversal rule works in 2026 (FY 2025-26 and FY 2026-27)

The second proviso to Section 16(2) of the CGST Act, 2017 makes payment to the supplier a condition for keeping input tax credit. Where a recipient fails to pay the supplier the value of the supply along with the tax on it within 180 days from the date of issue of the invoice, an amount equal to the credit availed has to be paid along with interest under Section 50. Supplies on which the recipient pays tax under reverse charge are outside the condition. The third proviso gives the credit back once the payment is made. This is the law as it stands on 1 October 2026; the present wording of the proviso dates from 1 October 2023 (Finance Act 2023).

Rule 37 of the CGST Rules, 2017 supplies the mechanics, and it was rewritten with effect from 1 October 2022 by Notification 19/2022-Central Tax, with further words added from the same date by Notification 26/2022-Central Tax. Three things follow from the current text. First, the reversal is proportionate: where the supplier has been paid in part, only the credit proportionate to the amount not paid is reversed. Second, the reversal is made in the GSTR-3B for the tax period immediately following the period of 180 days from the invoice date. Third, two kinds of value are deemed to have been paid — supplies made without consideration under Schedule I, and any amount added to the value under Section 15(2)(b), that is, an amount the supplier was liable to pay but which the recipient incurred.

The calculation is short. Unpaid amount ÷ invoice total (value plus tax) gives the unpaid proportion; multiply the credit availed by it to get the reversal. On interest, sub-rule (3) of the old rule — which charged interest from the date of availing the credit — was omitted from 1 October 2022, and the rule now refers only to interest payable under Section 50. Section 50(3) charges interest on credit that has been availed and utilised, at a notified rate of 18% a year (the Act permits up to 24%, but the notified rate was brought down to 18% retrospectively from 1 July 2017 by the Finance Act 2022), and Rule 88B(3) counts it from the date of utilisation to the date of reversal. Credit is treated as utilised when the electronic credit ledger balance falls below the amount concerned. This calculator applies that reading.

When the supplier is eventually paid, Rule 37(2) entitles the recipient to re-avail the credit, and Rule 37(4) says the Section 16(4) time limit does not apply to that re-availment — so a payment made two years later still restores the credit. On a part payment, the calculator restores credit in the proportion the later payment bears to the amount that was unpaid at day 180. Interest already paid does not come back.

Worked example — part payment, then a later instalment

An invoice dated 10 March 2026 for ₹10,00,000 plus GST of ₹1,80,000. The recipient availed the ₹1,80,000 credit in the March 2026 return, filed on 20 April 2026, and the credit ledger balance fell below this amount on that date as the credit was used to pay output tax. By day 180 only ₹7,08,000 had been paid. The reversal is made in a GSTR-3B filed on 20 October 2026. A further ₹2,36,000 is paid in December 2026.

Inputs

Invoice date10 March 2026

Invoice total₹11,80,000 (₹10,00,000 + ₹1,80,000 GST)

ITC availed₹1,80,000

Paid within 180 days₹7,08,000

Date of utilisation / date of reversal20 April 2026 / 20 October 2026

Paid later₹2,36,000

Output

Day 1806 September 2026

Unpaid at day 180₹4,72,000 — 40% of the invoice

ITC to reverse₹1,80,000 × 40% = ₹72,000

Interest₹72,000 × 18% × 183 ÷ 365 = ₹6,498

Re-availment on the later payment₹72,000 × 2,36,000 ÷ 4,72,000 = ₹36,000

Still reversed₹36,000 until the last ₹2,36,000 is paid

Only 40% of the credit is reversed, because 60% of the invoice — value and tax together — was paid in time. Day 180 falls in September 2026, so on the words of Rule 37(1) the reversal belongs in the GSTR-3B for October 2026; a recipient who prefers to leave no room for dispute reverses in the September 2026 return, as here. Had the credit remained unutilised in the ledger, there would have been no interest at all.

Common mistakes

Reversing the whole credit on a part-paid invoice

Since 1 October 2022 Rule 37(1) requires reversal of credit proportionate to the amount not paid to the supplier. Reversing 100% when 60% of the invoice has been paid understates credit and overstates interest.

Counting 180 days from the wrong date

The period runs from the date of issue of the invoice by the supplier. It does not run from the date goods were received, the date the credit was booked, or the agreed credit period — a 240-day credit term in the contract does not extend it.

Applying the rule to reverse-charge supplies

Both the second proviso to Section 16(2) and Rule 37(1) exclude supplies on which tax is payable on reverse charge basis. Unpaid GTA, legal or import-of-service bills do not trigger a Rule 37 reversal, however old.

Charging interest from the date of availment

That was the measure under sub-rule (3) of Rule 37, omitted from 1 October 2022. Interest on credit now follows Section 50(3) and Rule 88B(3): only where the credit was utilised, and from the date of utilisation. Using the old measure overpays interest for periods after September 2022.

Using 24% as the interest rate

Section 50(3) allows a rate up to 24%, but the rate actually notified is 18% a year. The Finance Act 2022 amended Notification 13/2017-Central Tax retrospectively from 1 July 2017 to bring it down from 24% to 18%.

Reporting the reversal in Table 4(B)(1)

Table 4(B)(1) is for reversals that are permanent. A Rule 37 reversal can be reclaimed, so it goes in Table 4(B)(2), and the reclaim goes through Table 4(A)(5) with disclosure in Table 4(D)(1). Putting it in 4(B)(1) leaves nothing in the reclaim statement to draw against later.

Treating the credit as lost once Section 16(4) has passed

Rule 37(4) states that the Section 16(4) time limit does not apply to re-availing credit that was reversed earlier. Payment to the supplier restores the credit whenever it is made.

Ignoring retention money and disputed balances

The rule asks only whether the value of the supply and the tax on it were paid within 180 days of the invoice. It makes no exception for retention money or amounts held back under a dispute, so on the text the credit proportionate to the withheld amount is reversible at day 180 unless the supplier issues a credit note reducing the value.

Frequently asked questions

What is the 180 days ITC reversal rule in GST in 2026?+

If a supplier is not paid within 180 days of the invoice date, the recipient must reverse the input tax credit taken on that invoice. Under the second proviso to Section 16(2) of the CGST Act read with Rule 37, the recipient must pay or reverse an amount equal to the input tax credit availed on the invoice, proportionate to the amount not paid, along with interest under Section 50. The credit can be re-availed when the supplier is paid. The rule applies in this form to FY 2025-26 and FY 2026-27.

How is the ITC reversal calculated when the invoice is partly paid?+

Proportionately. Reversal = ITC availed × (amount unpaid at day 180 ÷ invoice total including tax). If ₹4,72,000 of an ₹11,80,000 invoice is unpaid and the credit was ₹1,80,000, the reversal is ₹72,000.

From which date are the 180 days counted?+

From the date of issue of the invoice by the supplier. The contractual credit period, the date of receipt of goods and the date of taking credit are not relevant.

In which GSTR-3B do I reverse ITC for 180 days non-payment?+

Rule 37(1) says the GSTR-3B for the tax period immediately following the period of 180 days from the date of issue of the invoice. If day 180 falls in September, that is the October return on the words of the rule; many taxpayers reverse in the September return to avoid any dispute. It is reported in Table 4(B)(2).

What is the interest rate on ITC reversal under Rule 37 for FY 2025-26 and FY 2026-27?+

18% per annum. Rule 37 refers to interest under Section 50; for input tax credit the relevant limb is Section 50(3), whose notified rate is 18%, calculated under Rule 88B(3) from the date the credit was utilised to the date of reversal. If the credit was never utilised, no interest arises on that reading.

Is there a time limit to reclaim ITC reversed for non-payment within 180 days?+

No. Rule 37(2) entitles the recipient to re-avail the credit on making payment to the supplier, and Rule 37(4) provides that the time limit in Section 16(4) does not apply to re-availing credit that was reversed earlier.

Does the 180-day rule apply to reverse charge supplies?+

No. Supplies on which tax is payable on reverse charge basis are excluded by the second proviso to Section 16(2) and by Rule 37(1).

Does the rule apply to supplies between branches or related parties without consideration?+

No. The first proviso to Rule 37(1) deems the value of supplies made without consideration, as specified in Schedule I, to have been paid. Likewise, an amount added to the value under Section 15(2)(b) is deemed paid.

What is Rule 37A and how is it different from Rule 37?+

Rule 37A, inserted by Notification 26/2022-Central Tax, deals with the supplier not filing GSTR-3B. If the supplier has reported the invoice in GSTR-1 but has not filed the GSTR-3B for that period by 30 September following the financial year in which the recipient availed the credit, the recipient must reverse the credit by 30 November. Interest under Section 50 applies only if the reversal is not made by then, and the credit can be re-availed once the supplier files. Rule 37 concerns the recipient not paying the supplier.

Is interest refunded when the ITC is re-availed?+

No. Only the credit is restored on payment to the supplier. Interest paid on the reversal is a cost.

Authoritative sources

CGST Act, 2017 — Section 16 (eligibility and conditions for taking input tax credit) — Second proviso to sub-section (2): failure to pay the supplier within 180 days from the date of issue of invoice — amount equal to ITC payable with interest under Section 50, reverse-charge supplies excluded. Third proviso: credit on payment to the supplier. Wording as amended by the Finance Act 2023 with effect from 1 October 2023.

CGST Rules, 2017 — Rule 37 (reversal of ITC in the case of non-payment of consideration) — Sub-rules (1) and (2) substituted and sub-rule (3) omitted with effect from 1 October 2022 by Notification 19/2022-Central Tax; proportionate reversal wording inserted by Notification 26/2022-Central Tax. Sub-rule (4) keeps re-availment outside the Section 16(4) time limit.

CGST Rules, 2017 — Rule 37A (reversal where the supplier does not pay the tax) — Inserted by Notification 26/2022-Central Tax dated 26 December 2022: supplier GSTR-3B not filed by 30 September, reversal by 30 November, re-availment once the supplier files.

CGST Act, 2017 — Section 50 (interest) — Sub-section (3), substituted with effect from 1 July 2017 by the Finance Act 2022: interest on input tax credit wrongly availed and utilised. The notified rate is 18% per annum under Notification 13/2017-Central Tax as retrospectively amended.

CGST Rules, 2017 — Rule 88B (manner of calculating interest) — Sub-rule (3): interest from the date of utilisation to the date of reversal; credit is utilised when the electronic credit ledger balance falls below the amount concerned.

Always confirm against the latest version of the source. Regulations evolve and amendments are common.

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Last reviewed: 2026-10-01 · For informational purposes only — not professional advice.