ITC claimed in GSTR-3B exceeds GSTR-2B due to supplier's late GSTR-1 filing: how to handle?

As per Sec. 16(2)(c), ITC can be availed only when the supplier has deposited the tax collected on supplies. If payment was delayed and ITC was availed earlier, interest attracts u/s 50 until the period in which it reflects in GSTR-2B. Once it appears in GSTR-2B, no reversal is needed.

Dear Querist

The conditions for availing ITC is provided in Section 16(2)(a), 16(2)(aa) (w.e.f.01-Jan-22), 16(2)(b), 16(2)(ba) (w.e.f 1-Oct-22), 16(2)(c) and 16(2)(d) r w r 36, 37 and 37A. In your case there is violation of Sec.16(2)(aa) and Sec.16(2)(ba).

One cannot legitimately avail ITC unless this appears in his GSTR-2B as provided in Rule 36(4). There is no violation of Rule 37 and Rule 37A.

Therefore in the event the recipient has availed ITC before the said ITC gets reflected in GSTR-2B and if the ITC was utilised I would suggest you to remit interest using challan DRC-03. Else, ITC can be availed as when the same is reflected in the recipient's GSTR-2B suject to provisions of Sec.16(4) (ITC to be availed on or before 30-Nov of the subsequent year).

SC has perspicaciously ruled that ITC is a benefit/ rebate/ concession and no recipient has any vested right over the same.

Trust this clarifies. Thanks

2026 (7) TMI 1839 - SC Order - Bhandari Scrap Traders Versus Union of India & Ors.

Input Tax Credit conditional upon supplier's tax payment - Constitutional validity of Section 16(2)(c) of the CGST Act - Validity of the condition for availing Input Tax Credit under the CGST Act requiring payment of tax by the supplier-dealer, notwithstanding the purchasing dealer's asserted bona fides. - Distinction from Delhi VAT regime - Reference to decisions of Gujarat and Tripura High Courts - HELD THAT: - The Gujarat High Court, in [2026 (5) TMI 127 - GUJARAT HIGH COURT], undertook a detailed analysis of the differences between the Delhi Value Added Tax Act, 2004 and the CGST Act, 2017, including the scheme governing availment, reversal and subsequent re-availment of Input Tax Credit. Such an exercise was not undertaken by the Tripura High Court in Sahil Enterprises v. Union of India & Ors. [2026 (1) TMI 385 - TRIPURA HIGH COURT].

The statutory scheme under the CGST Act, including the provisions for reversal and subsequent re-availment of Input Tax Credit after discharge of tax liability by the supplier-dealer, is materially distinct from that under the Delhi VAT Act. Consequently, a purchasing dealer under the CGST regime cannot claim parity with a purported bona fide purchasing dealer under the Delhi VAT Act where the supplier fails to pay the requisite tax. The condition in Section 16(2)(c) was therefore neither unconstitutional nor liable to be read down. [Paras 2, 3, 4]

Accordingly, the Gujarat High Court was fully justified in holding that no grounds were made out either to declare Section 16(2)(c) of the CGST Act unconstitutional or to read down its provisions.

The challenge to Section 16(2)(c) of the CGST Act was rejected and the judgment upholding its validity was affirmed.

Final Conclusion: The special leave petitions were dismissed, affirming the validity of the supplier-tax-payment condition for Input Tax Credit under Section 16(2)(c) of the CGST Act.

No.- Special Leave to Appeal (C) No. 23931/2026 WITH SLP(C) No. 24088/2026, SLP(C) No. 24103/2026

Dated:- July 24, 2026

Take the ITC in the month it appears in your GSTR-2B; that is in order as long as it is within the s 16(4) time limit (30th November following the FY). If you had already claimed it in the earlier month's 3B, interest u/s 50(3) applies only if the credit was availed and utilised, i.e. if your credit ledger balance fell below that amount.