GST ITC Reversal 180-Day Rule and Interest Calculator
Input credit on a supplier invoice is conditional on paying the supplier, including the tax, within 180 days of the invoice date. This calculator shows the credit you must give back and the interest that follows when payment is late.
Your numbers
Total of IGST, CGST and SGST claimed on the supplier invoice.
The condition is payment within 180 days of the date of issue of the invoice.
Interest runs from the date you availed the credit to the date you reverse it.
Your results
Illustrative. Interest is levied under Section 50 and Rule 37; confirm treatment for part payments, supplier insolvency and credit notes with your adviser.
ITC reversal and interest as payment is delayed
Sweeps Days from invoice date to payment from 90 to 400, holding your other inputs fixed.
Get an ERP payables ageing alert
Optional: ask how to flag open supplier invoices nearing 180 days directly in your ERP.
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How to use the calculator
Enter the ITC you claimed, the number of days between the invoice date and payment, and the days between claiming and reversing the credit. The slider lets you test payment delays and the chart shows how reversal and interest behave across 90 to 400 days. Nothing happens inside 180 days. Beyond it, the full credit on that invoice is reversed, and interest is charged for the period the credit was wrongly held.
The rule in plain terms
The second proviso to Section 16(2) of the CGST Act says credit is lost if the recipient has not paid the supplier within 180 days from the invoice date. Rule 37 requires reversal of the amount in the return for the month after the 180 days expire, with interest under Section 50 at 18 percent per year from the date credit was availed. When payment is finally made, the credit can be claimed again, without further interest.
- Applies to supplies where payment is due to the supplier
- Reversal appears in GSTR-3B Table 4(B)(2)
- Re-claim is made on payment, in Table 4(A)(5)
- Credit notes and part payments need separate working
Worked example
A fabricator claims Rs 1,80,000 of ITC on an invoice, then pays the supplier after 240 days. The limit was crossed, so Rs 1,80,000 is reversed. If reversal happens 210 days after the credit was taken, interest at 18 percent comes to about Rs 18,641. The credit is later reclaimed once payment is made, so the lasting cost is the interest and the cash tied up, not the tax itself.
Practical controls
Run an ageing report on open payables by invoice date, not by due date, and flag items passing 150 days. In an ERP, make sure payment terms with long credit periods are reviewed against this rule. Disputed or withheld retention amounts often cause breaches silently.
- Age payables from invoice date
- Alert at 150 days
- Review retention and disputed invoices
- Reconcile reversals to the credit re-claim
Frequently Asked Questions
Does the 180-day rule apply to all purchases?
It applies where the supplier is to be paid and the payment has not been made within 180 days of the invoice date. It does not apply where tax is paid under reverse charge, and there are carve-outs for certain related-party and non-monetary supplies. Check your case.
Can I claim the credit again later?
Yes. Once the supplier is paid, including the tax portion, you can re-avail the credit reversed under this rule. The interest already paid is not refunded, so the late payment still has a real cost.
How is the 180 days counted?
From the date of issue of the invoice, not the date of receipt or booking in the ERP. Count calendar days. Reversal is due in the return for the month in which the 180th day falls or immediately after, depending on the facts.
What about partial payments?
Credit is reversed in proportion to the unpaid amount. This calculator assumes the whole invoice is unpaid. For partial payments, enter only the ITC attributable to the unpaid value.
We can build an ERP report that flags open supplier invoices approaching 180 days, so the reversal never comes as a surprise at month end.
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