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CA Intermediate · Taxation · Input Tax Credit

Nair Textiles, a registered person, purchased inputs on 15 June 2025 with GST of Rs 90,000 on an invoice dated that day. It did not pay the supplier within 180 days of the invoice date, and no payment was made until later. On 20 January 2026 the firm paid the supplier the full invoice value including GST. The ITC was originally availed in June 2025. Which statement is correct?

Nair must add back the Rs 90,000 ITC to output tax along with interest because payment was not made within 180 days of the invoice date. Once the supplier is actually paid, the same credit can be availed again.

  1. AITC of Rs 90,000 must be added to output tax liability with interest, and can be re-availed on paymentCorrect
  2. BITC of Rs 90,000 is permanently lost since payment was delayed
  3. CNo reversal is needed since payment was made within the financial year
  4. DITC must be reversed without interest and cannot be re-availed

Explanation

If the recipient fails to pay the supplier within 180 days of the invoice date, the ITC availed must be paid back with interest. When payment is later made, the recipient can re-avail the credit. The loss is therefore not permanent.

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