1. Rule 37 – Non-payment to Supplier
Nature: Payment-based reversal
Applicability: Where consideration along with tax is not paid to the supplier within 180 days from the date of invoice
Compliance:
ITC to be reversed in GSTR-3B
ITC can be re-availed on actual payment to supplier
2. Rule 37A – Non-filing of GSTR-3B by Supplier
Nature: Return filing-based reversal
Applicability: Supplier has not furnished GSTR-3B
Compliance:
Mandatory ITC reversal by recipient
ITC can be re-availed when supplier files return
3. Rule 38 – Banking Companies / NBFCs
Nature: Special reversal mechanism
Applicability: Banking companies and NBFCs opting for proportionate reversal
Compliance:
Monthly option exercised
Irrevocable for the entire financial year
4. Rule 42 – Common ITC (Inputs & Input Services)
Nature: Proportionate reversal
Applicability: Inputs/input services used for taxable as well as exempt supplies
Compliance:
Monthly provisional reversal
Final adjustment annually
5. Rule 43 – Capital Goods
Nature: Capital goods reversal
Applicability: Capital goods used commonly for taxable and exempt supplies
Compliance:
Monthly reversal over useful life of means of production
6. Section 17(5) – Blocked Credits
Nature: Permanent disallowance
Applicability: Specified goods and services (e.g., motor vehicles, personal consumption, etc.)
Compliance:
ITC not eligible at all; no re-availment permitted
7. Section 18(4) read with Rule 44 – Change in Nature of Supply
Nature: Event-based reversal
Applicability:
Change from taxable to exempt supply, or
Opting for composition scheme
Compliance:
ITC reversal required on the date of change
Conclusion
ITC reversal provisions are mandatory, time-sensitive, and compliance-critical. Non-adherence may lead to interest, penalties, and litigation. Regular reconciliation of GSTR-2B, vendor compliance monitoring, and periodic ITC reviews are strongly recommended.