Your Supplier Did Not File GSTR-3B by 30 September: Credit You Must Reverse

You did everything right. The supplier's invoice was in your GSTR-2B, you claimed the credit, and you paid the supplier. But the supplier reported the invoice in GSTR-1 and then never filed GSTR-3B, so the tax was never paid to the government. Rule 37A of the CGST Rules makes you reverse that credit.

What Rule 37A says

The rule applies when all of these are true:

• ✓you claimed credit on an invoice or debit note,
• ✓the supplier reported it in GSTR-1 or the Invoice Furnishing Facility (IFF), and
• ✓the supplier had not filed GSTR-3B for that tax period by 30 September after the end of the financial year.

You then have to reverse the credit in a GSTR-3B filed on or before 30 November of that year.

For credit on FY 2025-26 purchases, the supplier's cut-off was 30 September 2026, which has passed. Your reversal is due by 30 November 2026.

What happens if you do not reverse it

If you reverse after 30 November, you pay the credit back with interest under Section 50 of the CGST Act. Ignoring it also tends to show up later as a mismatch notice.

You can claim it back

The reversal is not permanent. Once the supplier files the missing GSTR-3B, you can claim the credit again in a later return. You do not lose the money, but your cash is tied up until the supplier files.

A worked example

A Pune engineering firm claimed ₹1,20,000 of credit in FY 2025-26 on invoices from eleven suppliers. In October 2026 it checks their filing status:

How to check your suppliers

1. List the suppliers behind your FY 2025-26 credit, with the months their invoices fall in.
2. Check each GSTIN on the GST portal using Search Taxpayer. The filing table shows which GSTR-3B returns have been filed and when.
3. Mark every month that was not filed by 30 September 2026.
4. Reverse the credit for those invoices in your October 2026 GSTR-3B (monthly filers). Quarterly filers should do it in the July to September 2026 return, as the next quarterly return is filed after 30 November.
5. Keep a re-claim list. Check those suppliers every month and reclaim once they file.

In GSTR-3B, the reversal goes in Table 4(B)(2). When you reclaim, the credit goes in Table 4(A)(5) and is reported in Table 4(D)(1).

How to avoid this next year

• ✓Check supplier filing status before you pay large bills, not after.
• ✓Hold back the GST portion of the payment from suppliers with a history of late filing, as your contract allows.
• ✓Move regular purchases away from suppliers who repeatedly miss returns.

Frequently asked questions

Sources

• ✓Analysis of Rule 37A and the GSTN advisory, Taxmann
• ✓Decoding Rule 37A: ITC reversal, TaxScan
• ✓Rule 37A from a CA's perspective, TaxGuru

This is a summary, not legal advice. Confirm with your chartered accountant before you rely on it.