Site navigation

A recipient has taken input tax credit on a domestic purchase not under reverse charge, but within 180 days of the invoice it pays only part of the value and tax. Under section 16(2) and rule 37 of…

Question and options

A recipient has taken input tax credit on a domestic purchase not under reverse charge, but within 180 days of the invoice it pays only part of the value and tax. Under section 16(2) and rule 37 of the CGST Rules, 2017, what must it pay or reverse?

  1. Nothing, because part payment was made within 180 days

  2. The credit proportionate to the unpaid amount, with interest

  3. The credit proportionate to the unpaid amount, without interest

  4. The entire credit on the invoice, with interest

Answer and explanation

Correct answer: B - The credit proportionate to the unpaid amount, with interest

The second proviso to section 16(2) of the CGST Act and rule 37 of the CGST Rules require a recipient who has not paid the value and tax within 180 days to pay or reverse credit proportionate to the unpaid amount, with interest under section 50. Only the unpaid part is affected, and credit can be re-availed once payment is made.

Practice for these exams

Related exam syllabi

More solved explanations in GST - levy, supply, input tax credit, registration & returns