ITC Reversal Calculator

How Rule 37 works

• If you do not pay the supplier the bill value plus GST within 180 days of the invoice date, you must reverse the ITC in proportion to the unpaid amount (Section 16(2), second proviso, and Rule 37(1) as amended from 1 October 2022).
• The 180 days are counted from the day after the invoice date, because the law says "from" the date of the invoice (General Clauses Act, section 9). If you count the invoice date as day 1, pay one day earlier to be safe.
• Rule 37(1) asks for the reversal in GSTR-3B for the tax period immediately following the 180 days. This tool shows the first tax period that starts after day 180. Reversing one return earlier, in the period in which day 180 falls, is the cautious choice. Check with your CA.
• Show the reversal in Table 4(B)(2) of GSTR-3B. When you pay, re-claim it in Table 4(A)(5) and also show it in Table 4(D)(1) (Circular 170/02/2022-GST). The GST portal tracks this in the Electronic Credit Reversal and Re-claimed Statement, so keep re-claims within its balance.
• There is no time limit to re-claim: the Section 16(4) cut-off does not apply to credit reversed earlier (Rule 37(4)).
• Interest under Section 50(3) applies only when the credit was availed and used. It runs from the date of use to the date of reversal (Rule 88B(3)). Credit counts as used when your credit ledger balance falls below it.
• Rule 37 does not apply to purchases under reverse charge. Supplies without payment listed in Schedule I, and amounts added to the value under Section 15(2)(b), count as paid.
• Reverse each tax head (IGST, CGST, SGST) in the same proportion.

How Rule 42 works

• Rule 42 splits the GST on inputs and input services you use for both taxable and exempt supplies, or for both business and non-business use. Capital goods follow Rule 43 instead.
• C1 = T − (T1 + T2 + T3). C2 = C1 − T4. D1 = (E ÷ F) × C2. D2 = 5% of C2, only if common inputs are also used for non-business purposes. C3 = C2 − (D1 + D2). You reverse D1 + D2.
• D1 and D2 are worked out on the common credit C2, not on T or C1. Work them out separately for IGST, CGST and SGST/UTGST (Rule 42(1)(l)).
• If you had no turnover in the period, use E and F from the last tax period that had turnover.
• Exempt supplies (E) include supplies where your buyer pays GST under reverse charge, transactions in securities, and sale of land and (subject to Schedule II para 5(b)) buildings. Land and building are valued at the stamp duty value; securities at 1% of their sale value (Explanation to Rule 45).
• E leaves out Schedule III activities (except sale of land and buildings, and sales from arrival duty-free shops), interest on deposits and loans unless you are a bank, financial institution or NBFC, and duty credit scrips (Section 17(3) and Explanation to Rule 43).
• F is your turnover in the State without GST. E and F both leave out central excise, central sales tax, State excise and State VAT on items such as petrol and liquor (Explanation to Rule 42(1)(i)).
• Year end: if the final D1 + D2 is higher than what you reversed, reverse the excess by the September return with 18% interest from 1 April. If it is lower, claim the difference by the September return (Rule 42(2)).