Reversal of Input Tax Credit if payment not made within 180 Days for the supplies

GST Input tax credit Reversal if Payment not made to supplier in 180 days :- 

If the Payment is not made by recipient of goods or services to supplier in 180 days from date of issue of Invoice , then recipient  has to reverse the GST ITC in his books of Accounts.

As per Second Proviso to Section 16(2) of CGST act 2017

where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed:

Furnishing Details of GST Input tax credit Reversal and Payment of Interest – if Payment not made to supplier in 180 days :- 

As per Clause 2 of the GST draft ITC rules,

A registered person shall furnish the details of such supply and the amount of input tax credit availed of in FORM GSTR-2 for the month immediately following the period of one hundred and eighty days from the date of issue of invoice.

The amount of input tax credit  shall be added to the output tax liability of the registered person for the month in which the details are furnished.

The registered person shall be liable to pay interest at the rate notified under sub-section (1) of section 50 for the period starting from the date of availing credit on such supplies till the date when the amount added to the output tax liability.

Take re credit of GST ITC credit – if Payment made after 180 days :-

As per Third Proviso to Section 16(2) of CGST act 2017

The recipient shall be entitled to avail of the credit of input tax on payment made by him of the  amount towards the value of supply of goods or services or both along with tax payable thereon.

Accounting entries in Books of Account – GST ITC credit , Reveral and recredit Claim

1. While Accounting the service invoice

Service Expense A/C — Dr

If it is Intra state

CGST A/C –  Dr

SGST A/C – Dr

To Sundry  creditors

If it is Inter state

Service Expense A/C — Dr

IGST A/C   – Dr

To Sundry  creditors

2. While making payment to the Suppliers

Sundry Creditors Dr

To Bank A/c

3. If payment to the supplier not made within 180 days

If it was Intra state

CGST reconciliation A/c Dr

SGST reconciliation A/C Dr

To  CGST A/C

To SGST A/C

If it was Inter state

IGST reconciliation A/C Dr

TO IGST A/C

4. Re-avail the credit while making payment to supplier after 180 days

If it was Intra state

CGST  A/C – Dr

SGST  A/C –Dr

To  CGST reconciliation A/c

To  SGST reconciliation A/C

If it was Inter state

IGST  A/C – Dr

To IGST reconciliation A/C