Reversal of input tax credit in the case of non-payment of consideration
Rule 37 of the CGST Rules
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Credit reversal on non-payment: where you have not paid the supplier the value plus tax within 180 days of the invoice, the credit is added to your output liability with interest under section 50; you re-avail it in the month you pay. It does not apply to reverse-charge supplies or to deemed supplies without consideration.
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The exact words of the law
1,872 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
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(1) A registered person, who has availed of input tax credit on any inward supply of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, but fails to pay to the supplier thereof, the amount towards the value of such supply 3 [whether wholly or partly,] along with the tax payable thereon, within the time limit specified in the second proviso to sub-section(2) of section 16 , shall pay 4 [or reverse] an amount equal to the input tax credit availed in respect of such supply 5 [, proportionate to the amount not paid to the supplier,] along with interest payable thereon under section 50 , while furnishing the return in FORM GSTR-3B for the tax period immediately following the period of one hundred and eighty days from the date of the issue of the invoice: Provided that the value of supplies made without consideration as specified in Schedule I of the said Act shall be deemed to have been paid for the purposes of the second proviso to sub-section
(2) of section 16 : Provided further that the value of supplies on account of any amount added in accordance with the provisions of clause
(b) of sub-section
(2) of section 15 shall be deemed to have been paid for the purposes of the second proviso to sub-section
(2) of section 16 .
(2) Where the said registered person subsequently makes the payment of the amount towards the value of such supply along with tax payable thereon to the supplier thereof, he shall be entitled to re-avail the input tax credit referred to in sub-rule (1).]
(3) 2 [****] (4)The time limit specified in sub-section
(4) of section 16 shall not apply to a claim for re-availing of any credit, in accordance with the provisions of the Act or the provisions of this Chapter, that had been reversed earlier.
What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
2022-10-01 · Substituted
19/2022-CTdated
Substituted (w.e.f. 01.10.2022) vide Notification No. 19/2022 – CT dated 28.09.2022.
2022-10-01 · Omitted
19/2022-CTdated
Omitted (w.e.f. 01.10.2022) vide Notification No. 19/2022 – CT dated 28.09.2022.
2022-10-01 · Inserted
26/2022-CTdated2
Inserted (w.e.f. 01.10.2022) vide Notification No. 26/2022 -CT dated 26.12.2022.
2022-10-01 · Inserted
26/2022-CTdated2
Inserted (w.e.f. 01.10.2022) vide Notification No. 26/2022 -CT dated 26.12.2022.
2022-10-01 · Inserted
26/2022-CTdated2
Inserted (w.e.f. 01.10.2022) vide Notification No. 26/2022 -CT dated 26.12.2022.
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Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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