Published 12 October 2026
Each October the September GSTR-2B carries a table that appears in no other month. It lists credit taken during the last financial year on invoices whose suppliers reported them in GSTR-1 but had not filed their own GSTR-3B for that period by 30 September. The recipient has until 30 November to reverse that credit. After that date the amount becomes payable with interest. The recipient may have paid the supplier in full, including the tax, and may have no way of making the supplier file. Rule 37A still requires the reversal, and allows the credit back only when the supplier files.
For credit taken in 2025-26, the deadline is a GSTR-3B filed on or before 30 November 2026. The condition behind the rule, that the supplier must actually have paid the tax, is explained in Input Tax Credit: the Conditions in Section 16(2). This guide covers the procedure.
The statute and the rule
Section 16(2)© of the CGST Act makes credit conditional on “the tax charged in respect of such supply has been actually paid to the Government”. Section 41(2), substituted by the Finance Act, 2022 from 1 October 2022, provides the mechanism:
The credit of input tax availed by a registered person under sub-section (1) in respect of such supplies of goods or services or both, the tax payable whereon has not been paid by the supplier, shall be reversed along with applicable interest, by the said person in such manner as may be prescribed:
Provided that where the said supplier makes payment of the tax payable in respect of the aforesaid supplies, the said registered person may re-avail the amount of credit reversed by him in such manner as may be prescribed.
Rule 37A of the CGST Rules prescribes that manner. It reads in full:
Where input tax credit has been availed by a registered person in the return in FORM GSTR-3B for a tax period in respect of such invoice or debit note, the details of which have been furnished by the supplier in the statement of outward supplies in FORM GSTR-1, as amended in FORM GSTR-1A if any, or using the invoice furnishing facility, but the return in FORM GSTR-3B for the tax period corresponding to the said statement of outward supplies has not been furnished by such supplier till the 30th day of September following the end of financial year in which the input tax credit in respect of such invoice or debit note has been availed, the said amount of input tax credit shall be reversed by the said registered person, while furnishing a return in FORM GSTR-3B on or before the 30th day of November following the end of such financial year:
Provided that where the said amount of input tax credit is not reversed by the registered person in a return in FORM GSTR-3B on or before the 30th day of November following the end of such financial year during which such input tax credit has been availed, such amount shall be payable by the said person along with interest thereon under section 50.
Provided further that where the said supplier subsequently furnishes the return in FORM GSTR-3B for the said tax period, the said registered person may re-avail the amount of such credit in the return in FORM GSTR-3B for a tax period thereafter.
Dates. The rule was inserted by Notification No. 26/2022-Central Tax of 26 December 2022, in force on publication. Notification No. 12/2024-Central Tax added the words “as amended in FORM GSTR-1A if any” from 10 July 2024. The first year to which it applied was 2022-23. The GST Network’s advisory of 14 November 2023 states that the amounts for that year were computed by the system and sent to recipients by email, for reversal by 30 November 2023.
How the rule works
Four conditions bring the rule into play:
- The recipient availed the credit in a GSTR-3B.
- The supplier reported the invoice or debit note in GSTR-1, GSTR-1A or the invoice furnishing facility.
- The supplier has not filed the GSTR-3B for the corresponding tax period. For a supplier filing quarterly, that is the quarter.
- That remains the position on 30 September after the year in which the recipient availed the credit.
The year is the year of availment, not the year of the invoice. Credit on a March 2025 invoice taken in a GSTR-3B for April 2025 is credit availed in 2025-26, and is tested on 30 September 2026.
The rule turns on whether the supplier filed GSTR-3B, not on whether it paid in full. A supplier that filed its return but under-reported or under-paid its tax is outside rule 37A. The condition in section 16(2)© still applies to such supplies, and the department enforces it through ordinary proceedings.
What to have ready
| Item | Where it comes from |
|---|---|
| Table 5 of the September GSTR-2B, generated in October | Portal |
| The recipient’s own record of credit availed on each listed invoice and debit note, and the period of availment | Books |
| Any of those invoices already reversed for another reason (rule 37, goods not received, IMS rejection) | Books; the Electronic Credit Reversal and Re-claimed Statement |
| Each supplier’s GSTR-3B filing status for the relevant periods | Portal (search taxpayer, return filing status) |
| Credit ledger balances since availment, for any interest calculation | Portal |
| Correspondence with suppliers about their returns | Books |
The table in GSTR-2B
Notification No. 12/2024-Central Tax substituted FORM GSTR-2B from 10 July 2024. Table 5 of the new form, “ITC Reversal Summary (Rule 37A)”, shows the credit to be reversed, by tax head, with invoice and debit note details below. Instruction 8 to the form states:
Table 5 captures the summary of ITC to be reversed under Rule 37A on or before 30th November following the end of financial year in which the ITC in respect of such invoice or debit note has been availed and corresponding FORM GSTR-3B has not been furnished by the supplier. Credit auto populated in this table shall be reversed in FORM GSTR-3B but should be reported as ITC reversed in Table 4(B)(2) of FORM GSTR-3B. Table 5 shall be made available only in FORM GSTR 2B of the September of the next financial year (made available in October).
Part A of the table is headed “Credit which may be reversed under FORM GSTR-3B”. The GSTR-2B user manual explains how the figure is reached: it is “calculated on the basis recipient’s GSTR-2B related to the tax period for which supplier’s GSTR-3B has not been filed”, taking invoices (other than reverse charge invoices), debit notes and their amendments, and leaving out credit notes. The portal can therefore see which documents reached the recipient’s GSTR-2B and which returns the supplier filed. It cannot see which credit the recipient actually took. GSTN’s 2023 advisory asked recipients to reverse the amount “if availed by them”. The rule itself requires reversal of credit availed, so a recipient that rejected an invoice in IMS, never took the credit, or has already reversed it has nothing further to reverse under rule 37A.
The forms and rows
- The reversal. GSTR-3B table 4(B)(2), as the GSTR-2B instruction states. Circular No. 170/02/2022-GST also places a section 16(2)© reversal in 4(B)(2), as one that “can be reclaimed in future”. The rows are explained in Reporting Credit in GSTR-3B Table 4.
- The re-availment. Table 4(A)(5), repeated in table 4(D)(1), in “the return in FORM GSTR-3B for a tax period thereafter” once the supplier files. The re-availment is checked against the portal’s Electronic Credit Reversal and Re-claimed Statement.
- Interest, where payable: table 5.1 of GSTR-3B, or FORM GST DRC-03.
- GSTR-9. Notification No. 13/2025-Central Tax added table 7A1 (“As per Rule 37A”) to the annual return from 22 September 2025. A rule 37A reversal necessarily falls in the next year’s returns, filed between October and 30 November. The instructions for 2024-25 onwards direct that credit of the year reversed in the next year’s returns up to 30 November is shown in table 12 and “will not be part of Table 7”. A re-availment in a later year is reported in table 6H of that year’s return, and is kept out of table 6A1.
Time limits
| Event | Date | Source |
|---|---|---|
| Supplier’s GSTR-3B tested | 30 September after the year of availment | Rule 37A |
| Table 5 available | September GSTR-2B, generated in October | GSTR-2B instruction 8 |
| Reversal | In a GSTR-3B filed on or before 30 November after that year | Rule 37A |
| Re-availment | In a GSTR-3B for a tax period after the supplier files | Rule 37A, second proviso |
| Time limit on re-availment | None: section 16(4) does not apply | Rule 37(4) |
A monthly filer’s October return, due on 20 November, is the usual vehicle. A November return filed early, on or before 30 November, also meets the words of the rule.
Portal steps
The GSTR-2B user manual describes an “ITC Reversal” tab in the summary, alongside “ITC available”, “ITC not available” and “ITC Rejected”. From it, the B2B invoices and debit notes hyperlinks under Part A Section I open the document details, which can also be downloaded in Excel. The filer opens the September GSTR-2B in October, reviews the ITC Reversal tab, and compares it with its own record of credit taken. In the GSTR-3B for October (or an earlier return filed by 30 November), it enters the reversal in table 4(B)(2) of the “Eligible ITC” tile. When a supplier later files, the filer enters the re-availment in 4(A)(5) and 4(D)(1) and checks the closing balance of the reclaim statement under Services > Ledgers. The return is signed by the authorised signatory, by digital signature certificate in the case of a company (rule 26), and filed in the ordinary way.
Interest
The first proviso makes the amount “payable by the said person along with interest thereon under section 50” where it is not reversed by 30 November. Section 41(2) speaks more widely, of reversal “along with applicable interest”. The text of rule 37A mentions interest only in the proviso.
Where interest is payable, it falls under section 50(3), at 18 per cent, on credit “wrongly availed and utilised”. It is calculated under rule 88B(3) from the date of utilisation to the date of reversal or payment. Credit is utilised when, and to the extent that, the credit ledger balance falls below the amount concerned. The calculation is illustrated in Reversing Credit When a Supplier Is Not Paid in 180 Days. If the balance never fell below the amount, there is no utilisation and no interest under section 50(3).
A worked illustration
The figures below are an illustration only.
- A recipient takes credit of Rs 50,000 of central tax and Rs 50,000 of State tax on a supplier’s August 2025 invoice, in its August 2025 GSTR-3B.
- The supplier reported the invoice in its August 2025 GSTR-1 but has not filed its August 2025 GSTR-3B by 30 September 2026.
- Table 5 of the recipient’s September 2026 GSTR-2B, generated on 14 October 2026, shows Rs 50,000 and Rs 50,000 against the invoice.
- The recipient reverses Rs 1,00,000 in table 4(B)(2) of its October 2026 GSTR-3B, filed on 20 November 2026.
- In GSTR-9 for 2025-26, the reversal is shown in table 12, because it was made in a return of the next year filed by 30 November.
- The supplier files its August 2025 GSTR-3B in March 2027. The recipient re-avails Rs 1,00,000 in its March 2027 GSTR-3B, in table 4(A)(5), and records it in table 4(D)(1). The re-availment is reported in table 6H of GSTR-9 for 2026-27.
If the recipient had not reversed by 30 November 2026, the Rs 1,00,000 would have become payable with interest under section 50, from the date of utilisation as rule 88B(3) defines it.
Common points of dispute
- Interest on a timely reversal. The rule’s text charges interest only where the reversal is late. Section 41(2) speaks of reversal “along with applicable interest”, and section 50(3) charges interest on credit wrongly availed and utilised. Whether credit that met every visible condition when taken, and is reversed by 30 November, is “wrongly availed” for that purpose is not settled by the rule or by a circular.
- The amount in table 5 against the books. The table reflects the supplier’s filings, not the recipient’s availment. Differences arise where credit was not taken, was taken in a different period, or was already reversed.
- Suppliers whose registration was cancelled. A supplier whose registration has been cancelled often never files the returns concerned, and the recipient’s credit then stays reversed. Cancellation does not of itself prevent the supplier from filing returns for earlier periods, but section 39(11) bars any GSTR-3B more than three years after its due date.
- Bona fide recipients. Recipients have argued that credit cannot be denied for the supplier’s default where they paid the tax to the supplier. The courts’ position is set out below.
How the courts have applied the condition
Suncraft Energy Pvt Ltd v Assistant Commissioner, State Tax, Ballygunge Charge (Calcutta High Court, Division Bench, MAT 1218 of 2023, 2 August 2023). The recipient’s credit for 2017-18 was disallowed because the supplier had not shown the invoices in GSTR-1, so the tax was treated as not paid to the Government. The recipient held tax invoices and bank statements showing payment of the price and tax to the supplier. The Court set the demand aside. Without any action against the supplier, and without showing collusion or exceptional circumstances such as a missing supplier, the department could not straight away require the recipient to reverse the credit. The Supreme Court dismissed the State’s petition for special leave on 14 December 2023 (SLP © Nos. 27827-27828/2023), “having regard to the facts and circumstances of this case(s) and the extent of demand being on the lower side”. The dismissal did not decide the question of law.
Bhandari Scrap Traders v Union of India (Supreme Court, SLP © No. 23931/2026 and connected petitions, 24 July 2026). The petitioners challenged the Gujarat High Court’s judgment of 1 May 2026 (SCA No. 749/2025), which had refused to declare section 16(2)© unconstitutional or to read it down in favour of bona fide purchasers. The Supreme Court dismissed the petitions. It held that the Gujarat High Court’s analysis showed “no possibility of drawing parity” between the Delhi VAT Act and the CGST Act, so as to treat a GST purchaser like a bona fide purchasing dealer under the Delhi VAT Act “when the supplier-dealer fails to pay the requisite tax”. It noted the scheme of section 41, under which the recipient may re-avail reversed credit once the supplier pays. It held that the High Court “was fully justified in holding that no grounds were made out to declare Section 16(2)© of the CGST Act as unconstitutional or read down the provisions thereof”, and stated that it “affirm[ed] and uphold[s] the impugned judgment”. The order also records that a special leave petition against a Tripura High Court decision on the same provision (Sahil Enterprises v Union of India) had been entertained.
State of Karnataka v Ecom Gill Coffee Trading Pvt Ltd (Supreme Court, Civil Appeal No. 230 of 2023, 13 March 2023). Under the Karnataka VAT Act, purchasing dealers claimed credit on purchases from dealers some of whom were found non-existent, relying on invoices and payment by cheque. The Court held that under section 70 of that Act the burden of proving the credit claim lies on the dealer claiming it, and is not discharged by invoices and payment alone. Section 155 of the CGST Act places the same burden on a person claiming credit.
Rule 37A is the administrative form of section 16(2)©: it reverses credit when the supplier’s return is missing, and restores it when the return is filed. Suncraft Energy did not decide the validity of section 16(2)©, which Bhandari Scrap Traders has now upheld. It concerned a demand raised on the recipient without any action against the supplier.
Consequences of not reversing
Under the first proviso, credit not reversed by 30 November becomes payable with interest. If it is not paid, it is recovered through a demand under section 73 or 74 for periods up to 2023-24, or under section 74A from 2024-25, with penalty under those sections. Differences between credit taken and suppliers’ filings also surface in scrutiny (Answering a Scrutiny Notice on Credit).
What can still be put right
- A reversal missed by 30 November. The amount can still be reversed in table 4(B)(2) of a later GSTR-3B, or paid through DRC-03, with interest under section 50. Under rule 88B(3), interest stops on the date of reversal or payment.
- A reversal made but not needed. If the supplier had in fact filed by 30 September, or the credit was never taken, the reversal can be re-availed in 4(A)(5) and 4(D)(1) of a later return.
- A re-availment not yet made. Rule 37(4) disapplies the section 16(4) time limit, so a re-availment is not lost by delay once the supplier files.
The general routes are in Correcting Mistakes in Returns and Late Returns.
The procedure in order
- In October, open the September GSTR-2B and download table 5.
- Match each listed invoice and debit note with the credit actually taken, and set aside those not availed or already reversed.
- Reverse the remaining credit, by tax head, in table 4(B)(2) of a GSTR-3B filed on or before 30 November.
- Where the reversal is late, compute interest under section 50(3) and rule 88B(3) and pay it in table 5.1 or through DRC-03.
- Track each supplier’s filing status. When a supplier files, re-avail the credit in table 4(A)(5) and record it in 4(D)(1), within the reclaim statement’s balance.
- Show the reversal in table 12 (or table 7A1, if it was made in the year’s own returns) of GSTR-9, and any re-availment in table 6H of the year in which it is made.
The next guide turns to reversals the recipient computes itself: common credit under rules 42 and 43.