GSTN has provided the system to facilitate the taxpayers, such amount of ITC required to be reversed on account of Rule 37A of CGST Rules for the financial year 2022-23 has been computed from system and has been communicated to the concerned recipient. The email communication to this effect has been sent on the registered email id of the taxpayer.
The taxpayers are advised to take note of it and to ensure that such ITC, if availed by them, is reversed as per rule 37A of CGST Rules before 30th of November, 2023 in Table 4(B)(2) of GSTR-3B while filing the concerned GSTR-3B.
Applicability of Rule 37A CGST Rules 2017
Rule 37A of GST was inserted in the CGST Rules on 26th December 2022 vide the CBIC notification 26/2022. It will be applied for Tax Invoices or Debit notes raised on or after 27th December 2022, the date this notification publication in the gazette.
All regular taxpayers except of composition Dealers need to comply with CGST Rule 37A. therefor, all the taxpayers who file GSTR-3B and are eligible to claim input tax credit must abide by the rule.
Hence, taxpayers who are filing GST returns either monthly (Forms GSTR-1 and GSTR-3B) or quarterly (using the Invoice Furnishing Facility (IFF), and Forms GSTR-1 and GSTR-3B) fall under the scope of this rule.
Further, All inward supplies interstate (IGST) and intrastate (CGST and SGST) purchases and availing Input Tax Credit need to comply with Rule 37A of GST.
Inward supplies made on a reverse charge basis will not fall under this rule since the onus of paying tax lies on the buyer/recipient themselves.
How to reverse ITC under Rule 37A of GST?
The recipient who have claimed the Input Tax Credit on account of GSTR-2B in the Table 4(A)(5) of Form GSTR-3B. If CGST Rule 37A gets attracted in that ITC, they need to reverse such ITC by through the Table 4(B)(2) of Form GSTR-3B.
No interest will be applicable on ITC reversal if the reversal has been made within the prescribed time limit. However, interest will be applicable on ITC reversal if it is done after the defined time limit
Failure to comply with Rule 37A of GST
The recipient who fails to comply with CGST Rule 37A will be issued a GST demand notice of tax payment along with interest to the extent of excess ITC claimed. The interest will be charged as per the provisions of Section 50 of the CGST Act, at 24% per annum for excess ITC claimed and utilised from the date of such utilization until the date of payment.
provided that such interest is also payable when the buyer reverses ITC after 30th November of the year following the financial year.
Re-claiming ITC reversed under Rule 37A of GST
relaxations are provided in the Rule 37A of GST to buyers who genuinely have missed claiming their Input Tax Credit due to the fault of the sellers.
buyers can re-claim reversed ITC even after the time limit given above if the supplier-
- Files the particular period’s GSTR-3B after 30th September of the year following the Financial Year
OR - Reports the missed invoice/debit notes in any period’s GSTR-3B filed after 30th September of the year following the Financial Year.
AND
- Pays tax on such invoice/debit note after 30th September of the year following the FY
The recipient can re-claim or re-avail the ITC in Table 4(D)(1) of Form GSTR-3B of any subsequent return periods. Note that such re-claims are allowed despite the restriction put under Section 16(4) of the CGST Act.
The extract of the Rule 37A of CGST Rules 2017
“37A. Reversal of input tax credit in the case of non-payment of tax by the supplier and re- availment thereof. Where input tax credit has been availed by a registered person in the return in FORM GSTR-3B for a tax period in respect of such invoice or debit note, the details of which have been furnished by the supplier in the statement of outward supplies in FORM GSTR-1 or using the invoice furnishing facility, but the return in FORM GSTR-3B for the tax period corresponding to the said statement of outward supplies has not been furnished by such supplier till the 30th day of September following the end of financial year in which the input tax credit in respect of such invoice or
debit note has been availed, the said amount of input tax credit shall be reversed by the said registered person, while furnishing a return in FORM GSTR-3B on or before the 30th day of November following the end of such financial year:
Provided that where the said amount of input tax credit is not reversed by the registered person in a return in FORM GSTR-3B on or before the 30th day of November following the end of such financial year during which such input tax credit has been availed, such amount shall be payable by the said person along with interest thereon under section 50.
Disclaimer: The information provided above is intended for guidance and support purposes only. Taxpayers are advised to refer to the relevant sections of the GST Act and Rules for legal definitions and interpretation. The content shared does not constitute legal advice. Users are responsible for ensuring compliance with applicable laws and regulations.