ITC against invoices paid after 180 days as per agreed terms

[MohanLal tiwari]

Dear Experts,

As per section 16 of CGST act. - 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:

Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon.

Few of our customers are making payment through 180 days LC wherein we are assured for payment from buyer but after 180 days.

kindly advise how they will be entitled for ITC.

AI Summary

Eligibility of Input Tax Credit Under GST for Payments Made After 180 Days: Section 16 CGST Act Explained A query was raised about the eligibility of Input Tax Credit (ITC) under the Goods and Services Tax (GST) when payments are made after 180 days, as per agreed terms. According to Section 16 of the CGST Act, if payment is not made within 180 days from the invoice date, the ITC availed must be added to the output tax liability, with interest. However, ITC can be reclaimed once payment is made. Responses highlighted that ITC must be reversed if not paid within the stipulated time but can be reclaimed upon payment. Statutory interest may also apply in such cases.