FinyaaraITC 180-day rule calculator
If a supplier isn't paid within 180 days of the invoice date, the ITC on that bill has to be reversed. Enter a bill to see its deadline, how much ITC is at risk, and which GSTR-3B to report a reversal in.
How the rule works
The second proviso to Section 16(2) of the CGST Act, with Rule 37, says you can keep ITC on a purchase only if you pay the supplier the bill value and the tax within 180 days of the invoice date. The clock starts from the invoice date, whatever credit terms you agreed with the supplier.
- Day 180 is the invoice date plus 180 days. Pay by then and nothing changes.
- Only the unpaid part reverses. If you have paid half the bill, half the ITC is at risk.
- Report the reversal in the GSTR-3B for the tax period right after the one in which day 180 falls, and pay interest with it.
- Claim it again once you pay the supplier.
The interest shown above is a rough estimate at 18% a year from day 180. The exact figure depends on when the credit was used, so check it with your CA.
Tracking it for every bill
Working this out one bill at a time is fine for a few bills. Finyaara's ITC Watch does it for every unpaid purchase bill in your TallyPrime books, using the bill-wise outstanding Tally already keeps. It sorts them by days left and shows which payments protect the most ITC. For a CA, that's every client on one screen. For the full rule, with a worked example and the GSTR-3B tables, read ITC reversal under Rule 37. See also our GSTR-2B reconciliation guide.
Questions
What is the 180-day rule for ITC?
Under the second proviso to Section 16(2) of the CGST Act and Rule 37, if you don't pay a supplier the bill value and the tax within 180 days of the invoice date, you must reverse the ITC you took on the unpaid part, with interest.
Can I claim the ITC again after paying the supplier?
Yes. Once you pay the supplier, you can claim the reversed ITC again. The interest already paid is not refunded.
Does the 180-day rule apply to reverse charge bills?
No. Under reverse charge you pay the tax to the government yourself, so the rule does not apply. It also does not apply to supplies made without consideration that are treated as supplies under Schedule I.
Every bill's 180-day clock, from your Tally books
We'll set up ITC Watch on your companies with you, in person or online.
General information, not tax advice. Rules change; check anything that matters with your CA. Nothing you enter here leaves your browser.