Hello,
Rule 37 of the Central Goods and Services Tax (CGST) Rules pertains to the reversal of input tax credit (ITC) if the payment to the supplier is not made within 180 days from the date of the invoice. Here are the answers to your specific queries:
1. Since when is this rule applicable?
Rule 37 has been applicable since the inception of the CGST Rules, which came into effect on July 1, 2017, along with the implementation of the Goods and Services Tax (GST) regime in India.
2. If the invoice amount is paid after 180 days and ITC is not reversed, how much interest and penalty is liable?
If the payment is not made within 180 days from the date of the invoice and the ITC is not reversed, the interest is liable as per the provisions of the CGST Act. Specifically:
- Interest: According to Section 50 of the CGST Act, interest at the rate of 18% per annum is applicable on the amount of ITC that is liable to be reversed. The interest is calculated from the date of availing the ITC till the date when the amount is added to the output tax liability.
- Penalty: Generally, there is no specific penalty for the non-reversal of ITC under Rule 37. However, non-compliance may attract general penalties under the CGST Act, such as under Section 122, which deals with various offenses and penalties. These penalties can vary and may be significant depending on the specific circumstances and the amount involved.
3. If part payment is done before 180 days, which is more than the ITC amount, can we say that tax payment has been done to the supplier?
- Proportional Reversal: The rule specifies that if the payment is not made to the supplier within 180 days, the ITC attributable to the unpaid portion of the invoice needs to be reversed. If the payment made is more than the tax amount (i.e., the ITC amount), the ITC reversal might not be necessary, as the tax component has been effectively paid.
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