Structuring Success | Tax and Business Blogs by EAZTAXBIZ

  The Harsh 180-Day ITC Reversal Rule Under GST — A Compliance Nightmare for Businesses One of the most controversial provisions under the Goods and Services Tax (GST) regime is Section 16(2) of the CGST Act, 2017 read with Rule 37 of the CGST Rules, 2017 , which mandates reversal of input tax credit if payment to the supplier is not made within 180 days from the date of invoice. 📜 The Legal Provision Under Section 16(2) , a registered person is entitled to claim ITC only if: They possess a valid tax invoice or prescribed document, They have received the goods or services, The tax charged has been actually paid to the government, and They have paid the supplier the value of supply along with the tax within 180 days from the date of invoice. If this 180-day payment condition is not met: The ITC already claimed must be added back to the output tax liability in the month immediately following the expiry of 180 days, with applicable interest . Once payment...