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Non payment to supplier within 180 days

ADNAN HUSSAIN (Student CA IPC / IPCC) (157 Points)

15 September 2020

Hello,

i have some suppliers to whom i made payment after 180 days and did not reverse ITC also.

So will this have any impact?

My yearly turnover is Rs. 35lakhs, GST audit not applicable

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2 Replies

CA Sunil Kumar (Chartered Accountant) (4524 Points)
Replied 15 September 2020

If you have availed ITC on inward supplies. But, if you fail to pay the invoice amount to the supplier within 180 days, itc need to be reversed with interest as per second provise to sec 16(2).

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Shivam RC (Student) (23683 Points)
Replied 15 September 2020

It's better to Reverse the ITC claimed due to non-payment to Supplier within 180 days ( as specified in Second Proviso to Section 16(2) of the CGST Act 2017 ) along with Interest @ 18% p.a. by adding the ITC amount to your Output Tax liability and then re-claim it in next month's GSTR-3B. INTEREST becomes YOUR COST.

You will be in a safer position if any Departmental inquiry / audit is done in the future. The department might also charge Penalty i.e. General Penalty u/s 125 of the CGST Act 2017 upto Rs. 50,000 for violating the Provisions of the GST Law. So it's better to reverse it now to avoid unnecessary harassment from the Department.

Regards,
Shivam RC.

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