TIME LIMIT TO MAKE PAYMENT TO SUPPLIERS

[SURYAKANT MITHBAVKAR]

Under GST regime we avail input credit as soon as Goods received in our premises/factory.

Please let us know what is time limit to make payment to the suppliers though our credit is not disallow.

[Rajagopalan Ranganathan]

Sir,

According to second proviso to Section 16 (2) (d) of CGST Act, 2017 "where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed."

According to rule 37 (1) of CGST rules, 2017 "a registered person, who has availed of input tax credit on any inward supply of goods or services or both, but fails to pay to the supplier thereof, the value of such supply along with the tax payable thereon, within the time limit specified in the second proviso to sub-section (2) of section 16, shall furnish the details of such supply, the amount of value not paid and the amount of input tax credit availed of proportionate to such amount not paid to the supplier in FORM GSTR-2 for the month immediately following the period of one hundred and eighty days from the date of the issue of the invoice."

[DR.MARIAPPAN GOVINDARAJAN]

You have to pay the bill within one hundred and eighty days.

[Ganeshan Kalyani]

Yes the payment to supplier should be made within 180 days.

AI Summary

Time limit for supplier payment is essential to preserve input tax credit; non-payment triggers credit reversal and reporting obligations. A recipient who avails input tax credit must pay the supplier within the specified period from the invoice date or else add the proportionate input tax credit back to output tax liability with interest, and furnish details of the unpaid supply and credit in the prescribed return for the period immediately following expiry of that period.