TaxTMI 
TaxTMI 
TaxTMI 
Rule Reference:
Rule 37A – Reversal of input tax credit in the case of non-payment of tax by the supplier and re-availment thereof
(Inserted via Notification No. 26/2022 – Central Tax, dated 26.12.2022)
Rule 37A requires a registered person (recipient of goods/services) to reverse the Input Tax Credit (ITC) they have availed if the supplier has not filed their GSTR-3B return for the tax period related to that ITC, by 30th September following the end of the financial year.
However, once the supplier files the pending GSTR-3B later, the recipient is allowed to re-avail the same ITC in any future GSTR-3B return.
- You claim ITC on an invoice or debit note in your GSTR-3B, and the supplier has also reported that invoice in GSTR-1 or IFF.
- But the supplier does not file their GSTR-3B for that tax period (which is necessary for tax payment).
- If the supplier does not file GSTR-3B by 30th September following the end of that financial year, then:
You must reverse the ITC in your GSTR-3B filed on or before 30th November of that year.
- If you fail to reverse it by 30th November, the ITC amount becomes payable along with interest under Section 50 of the CGST Act.
- Later, if the supplier files the pending GSTR-3B, you are allowed to re-avail the ITC in any future GSTR-3B return.
Let’s take an example based on Financial Year 2024–25 (April 1, 2024 to March 31, 2025):
Event | Date | Action |
Invoice issued by supplier | May 15, 2024 | Supplier issues invoice to you |
Supplier reports invoice in GSTR-1 | May-24 | You can see it in GSTR-2B |
You claim ITC | June 2024 (May GSTR-3B) | You avail ITC in your GSTR-3B return |
FY 2024–25 ends | March 31, 2025 | Relevant financial year closes |
Supplier fails to file GSTR-3B for May | Till September 30, 2025 | ITC remains unsupported due to non-filing by supplier |
You reverse the ITC | On or before November 30, 2025 | Mandatory reversal required under Rule 37A |
You don’t reverse the ITC | After November 30, 2025 | You are liable to pay that amount along with interest |
Supplier eventually files GSTR-3B | December 10, 2025 | Now tax is considered paid by supplier |
You re-avail ITC | December 2025 or later | You can take ITC again in your next GSTR-3B |
Key Compliance Points:
- Monitor supplier GSTR-3B filing status if you’re availing ITC.
- Reverse ITC before 30th November, if the supplier hasn’t filed GSTR-3B by 30th September.
- Pay interest if reversal is delayed beyond the deadline.
- Re-avail ITC when the supplier eventually files their return.
Final Note:
Rule 37A places responsibility on recipients to track supplier compliance, ensuring that ITC is only retained when the corresponding tax has actually been paid by the supplier through GSTR-3B. This rule helps prevent wrongful credit and ensures more accurate and compliant ITC claims.
