ITC reversal under Rule 37: the 180-day payment rule explained

If you haven't paid a supplier within 180 days of the invoice date, the ITC on the unpaid part has to be reversed. Here's how much, when, where it goes in GSTR-3B, and how to get the credit back.

The rule

The second proviso to Section 16(2) of the CGST Act says that if you don't pay a supplier the value of the supply and the tax within 180 days of the invoice date, the ITC you took on it must be reversed, with interest. Rule 37 of the CGST Rules says how: the ITC in proportion to the unpaid amount goes back in GSTR-3B for the tax period immediately after the one in which day 180 falls.

• Day 180 is the invoice date plus 180 days. The supplier's credit terms don't change it.
• Only the unpaid part reverses. Pay half the bill and half the ITC stays.
• It isn't permanent. When you pay the supplier, you can claim the ITC again.

A worked example

A bill dated 1 March 2026 for ₹1,18,000, of which ₹18,000 is GST. By day 180 you have paid ₹59,000, half the bill.

Try your own bill in the ITC 180-day calculator.

Where it goes in GSTR-3B

CBIC's Circular 170/02/2022 says how to show it:

• The reversal goes in Table 4(B)(2), "Others", which is for reversals you may claim back later. Table 4(B)(1) is for permanent reversals, such as blocked credits under Section 17(5).
• The re-claim, once you've paid, goes in Table 4(A)(5), "All other ITC", and is also shown in Table 4(D)(1).

Interest

Rule 37 adds interest under Section 50 to the reversed amount. The rate for ITC wrongly availed and used is 18% a year, and how long it runs depends on when the credit was used, so work out the exact figure with your CA. The calculator shows a rough estimate from day 180.

When the rule doesn't apply

• Reverse charge bills. You pay the tax to the government yourself.
• Supplies treated as supplies without consideration under Schedule I, such as supplies between related or distinct persons (for example, your own branch in another state) made without payment.
• Amounts the supplier added to the value under Section 15(2)(b), that is, costs the supplier owed but you paid directly. These count as paid.

Don't confuse it with Rule 37A

Rule 37A is a different reversal: it applies when your supplier hasn't paid their tax. If an invoice appeared in your GSTR-2B but the supplier hasn't filed the GSTR-3B for that period by 30 September of the next financial year, you reverse that ITC by 30 November. You can claim it back once the supplier files.

Keeping on top of it

The hard part isn't the maths; it's noticing a bill before day 180. Tally already keeps bill-wise outstanding for each supplier, so the information is there. It just isn't shown as "ITC at risk". Sort unpaid purchase bills by invoice date every month, and pay the oldest GST-bearing bills first. Related: GSTR-2B reconciliation with TallyPrime.

Questions

Does Rule 37 apply if I paid part of the bill?

Yes, for the unpaid part only. The ITC to reverse is in proportion to what's still unpaid on day 180; the paid part keeps its credit.

Is the 180 days counted from the invoice date or the due date?

From the invoice date. The credit terms you agreed with the supplier don't change it.

Can I claim the reversed ITC again?

Yes. Once you pay the supplier, you can claim it again in a later GSTR-3B. The interest you paid is not refunded.

General information, not tax advice. Rules change; check anything that matters with your CA.