Short answer
If you claim input tax credit on a purchase but don't pay your supplier value plus GST within 180 days of invoice date, Section 16(2) of CGST Act makes you pay back an amount equal to that credit, with interest. Once you pay supplier, you can claim it again, and normal ITC time limit doesn't apply to that re-claim.
ITC has six conditions, and payment is one more
Under Section 16(2), you can take credit only when all of these hold:
- You hold a tax invoice or debit note from a registered supplier.
- Supplier has furnished that invoice in their outward supply details.
- You have received goods or services.
- Credit isn't restricted in details communicated to you.
- Tax charged has actually been paid to Government.
- You have filed your own return.
Second proviso to Section 16(2) adds a condition most businesses forget after month-end: paying your supplier. Credit assumes your supplier was paid, tax included. If they weren't paid within 180 days, law takes credit back.
Example: one invoice, three outcomes
Say you buy goods on 1 May 2026 for ₹10,00,000 plus 18% GST of ₹1,80,000, and claim ₹1,80,000 as ITC.
| By day 180 you have paid | What happens to ITC |
|---|---|
| ₹11,80,000 (full) | Nothing. Credit stays. |
| ₹5,90,000 (half) | Reverse ₹90,000, with interest |
| Nothing | Reverse ₹1,80,000, with interest |
Under Rule 37(1), reversal is proportionate to amount not paid, and goes in your GSTR-3B for tax period immediately following 180 days.
Paying later: claiming it back
Once you pay supplier value plus GST, Rule 37(2) lets you re-avail credit you reversed. Rule 37(4) says time limit in Section 16(4), which normally ends ITC claims on 30 November after financial year, doesn't apply to this re-claim. So an old unpaid bill doesn't cost you credit permanently. It costs you interest and cash flow while it stays unpaid.
For FY 2025-26 credit generally, see 30 November ITC deadline.
Where it goes in GSTR-3B
Circular 170/02/2022-GST (para 4.3(C)) says reversal under Rule 37 goes in Table 4(B)(2), as a reversal that can be reclaimed later. Re-claimed credit goes in Table 4(A)(5) and is also shown in Table 4(D)(1).
GST Council's 57th meeting on 8 October 2026 recommended a new facility for reporting ITC reversed and reclaimed in GSTR-3B. Until it's notified, follow Circular 170. Check latest portal format before you file.
What's outside this rule
- Reverse charge supplies: excluded from 180-day rule.
- Supplies without consideration under Schedule I: treated as paid.
- Amounts added to value under Section 15(2)(b): treated as paid. These are amounts supplier is liable to pay but you paid instead.
Don't confuse it with Rule 37A
Rule 37A is a separate reversal. It applies when your supplier reported an invoice but hasn't filed their own GSTR-3B for that period by 30 September after year-end. You then reverse that credit in a GSTR-3B filed by 30 November, and can re-claim it once supplier files.
So one unpaid, unfiled invoice can trigger both rules: Rule 37 because you haven't paid, Rule 37A because supplier hasn't filed.
A monthly check that prevents this
- Each month, pull a list of supplier bills older than 150 days that are unpaid or part-paid.
- Pay them before day 180, or plan reversal in next GSTR-3B.
- Track bills you reversed, so you re-claim once they're paid.
How we help
We run monthly ITC checks and GSTR-3B filings for businesses with 10 to 150 staff. Tell us about your setup: a Chartered Accountant replies within one working day with next steps, then scope and fee in writing. Book a consultation.
General information, not advice for a specific business. References are to CGST Act, 2017 and CGST Rules, 2017 as available on CBIC's website. Last reviewed November 2026.