What is Consequences of not reversing ITC for non-payment to suppliers within 180 days?
Nexa Consultancy | Startup & Finance Glossary
If a business claims Input Tax Credit (ITC) on an invoice but fails to pay the supplier within 180 days, it must reverse that ITC and add it to its output tax liability, along with interest. The ITC can be reclaimed once the payment is made.
Startup Example: A startup claims ITC of ₹18,000 on a purchase but doesn't pay the supplier for 7 months. It must pay back the ₹18,000 to the government with interest for the period of delay.
Our bookkeeping services track payables to manage this compliance.