Reversal of Input Tax Credit in case of Non-payment of Consideration

Input Tax Credit reversal if payment is not made within 180 days

As per second proviso to Section 16, where a recipient fails to pay to the supplier of goods or services or both the consideration towards the value of supply along with tax payable thereon within a period of 180 days from the date of invoice then an amount equal to the input tax credit availed by the recipient shall be added to the output tax liability along with interest in such manner as may be prescribed.

Re-credit when payment is made subsequently :-
As and when 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.

In case of full payment - full credit would be allowed.
In case of part payment - proportionate credit would be allowed.

Exceptions :-

The above condition does not apply in the following situations :

(a) Supplies on which tax is payable under reverse charge.

(b) Deemed supplies without consideration i.e. value of supplies made without consideration as specified in Schedule I of the said act.

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