What Happens If You Don’t Pay Your Supplier Within 180 Days?
GSTZone Desk · Updated 2026
Short answer
If you don’t pay your supplier (the invoice value plus GST) within 180 days of the invoice date, you must reverse the input tax credit you’d claimed on that invoice, along with interest — and can reclaim it once you actually pay.
In detail
This rule exists to stop businesses from claiming credit on paper while sitting on the actual payment indefinitely. Rule 37 gives you 180 days of grace from the invoice date; cross that without paying, and the ITC you’ve already used has to be added back to your output tax liability.
Interest applies on the reversed amount from the date the credit was originally availed, not from the 180-day mark — so the longer the ITC sat unreversed after the deadline before you catch it, the more interest accumulates.
The reversal isn’t permanent. The moment you actually pay the supplier, even well after 180 days, you’re entitled to reclaim the same ITC in the period you made the payment — this rule is about timing discipline, not a permanent denial.
GSTZone tip
Run a simple ageing report on your accounts payable specifically against the 180-day mark each month — it’s an easy rule to lose track of when payment terms with a supplier stretch past six months for genuine business reasons.
Related questions
Does this apply to reverse-charge supplies too?+
No — supplies where you pay GST under reverse charge, and a few other specific categories like deemed supplies without consideration, are excluded from this 180-day payment requirement.
What if I pay in instalments?+
The rule works on the proportion actually paid — ITC corresponding to the unpaid portion beyond 180 days needs reversal, while ITC on the portion already paid within time stays intact.
Want the law itself?
Go deeper on Input Tax Credit
This page answers one question. Our GST Knowledge Hub carries every section and rule behind it — the exact legal text, what it means in plain English, and how it has been amended. Free, no login.
Need this sorted for your specific case?
Every business’s facts are a little different. Talk to a GSTZone expert — we’ll tell you exactly where you stand, and handle the filing if you need it.
Or call +91 97554 06939 · WhatsApp us