GSTAgent›Workflows›Rule 37 — 180-Day ITC Tracker

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Rule 37 — 180-Day ITC Tracker

Track every invoice against the 180-day payment deadline. Never miss a reversal or pay unnecessary interest.

Section 16(2)(c) requires that the supplier is paid within 180 days of the invoice date, failing which ITC claimed must be reversed. Rule 37 governs this reversal. GSTAgent tracks every purchase invoice with unpaid consideration, flags reversals due, and computes DRC-03 interest per invoice automatically.

Rule 37Sec 16(2)(c)DRC-03Interest

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The Problem

Why this needs to be automated

📅

180-day deadline is per invoice

The 180-day clock runs separately for every invoice from its date. With hundreds of invoices per client, tracking individually in Excel is practically impossible — most CAs miss reversals entirely.

💸

Interest compounds from original ITC claim date

If ITC was claimed in April and the 180-day deadline passes in October, interest runs from April — not October. Most CAs compute from the reversal date and significantly under-compute interest.

🔄

ITC can be reclaimed after payment

Once the supplier is paid, the reversed ITC can be reclaimed. Without tracking which invoices were paid and when, reclaims are missed — leaving money on the table permanently.

Regulatory Context

The law that makes this matter

Sec 16(2)(c)

Payment within 180 days

ITC is available only if the registered person has paid the supplier the value of supply including tax within 180 days from the date of invoice.

Rule 37

Reversal of ITC

If payment is not made within 180 days, ITC must be reversed in GSTR-3B Table 4(B)(2) along with interest at 18% p.a. from the date ITC was availed.

Rule 37A

Reclaim after payment

Once the supplier is paid, reversed ITC can be reclaimed in the month of payment. Rule 37A clarifies the re-availing procedure post Finance Act 2022.

How It Works

4 steps. Mostly automated.

Sync bill-wise data from Tally

The Audit Bridge fetches bill-wise payment details from TallyPrime — which invoices have been paid, partially paid, or remain outstanding.

180-day countdown per invoice

Each unpaid/partly paid invoice gets a countdown from its invoice date. Invoices crossing 180 days are flagged immediately.

DRC-03 interest computed

For each overdue invoice: ITC to reverse = ITC claimed proportionate to unpaid amount. Interest = 18% p.a. from date ITC was availed to reversal date.

Reclaim tracking

Once payment is made, the system moves the invoice to reclaim status. ITC reclaim amount and period shown for GSTR-3B entry.

Sample Output

What you actually see

Sample data — Metro Print Works Pvt. Ltd · FY 2026-27

Total invoices tracked

Paid within 180 days

Overdue — reversal required

ITC to reverse

₹48,230

Interest due @18% p.a.

₹4,341

Paid after 180 days — reclaim

₹12,450

Sample data for illustration only. Actual results depend on your client's Tally data. Not professional tax advice.

Edge Cases

How GSTAgent handles the tricky ones

Scenario	GSTAgent Output
Partial payment made against invoice	Proportionate ITC reversal — only unpaid portion reversed
Credit note against outstanding invoice	Credit note reduces outstanding — 180-day applies to net payable
Advance payment before invoice	Advance adjusted — 180 days from invoice date not advance date
Supplier bankrupt — payment impossible	Flagged for professional judgement — documentary evidence required

Per invoice

Interest computed, not aggregate

180 days

Countdown per invoice

Auto

DRC-03 amount ready

Rule 37A

Reclaim tracked post-payment

FAQ

Common questions

From which date does the 180-day clock start?

From the date of the invoice — not the date of ITC claim or the date of GSTR-3B filing.

What if part of an invoice is paid?

ITC reversal is proportionate — only the ITC attributable to the unpaid portion needs to be reversed.

Does Tally track bill-wise payments automatically?

Yes — if Bill-wise Details are enabled in Tally (Accounts Features → Maintain Bill-wise Details = Yes). The Bridge fetches this data.

Can I reclaim ITC after paying the supplier post 180 days?

Yes — under Rule 37A, once payment is made, reversed ITC can be reclaimed in the GSTR-3B of the month of payment.

Interest is from which date exactly?

From the date ITC was availed (date of GSTR-3B in which ITC was claimed) to the date of reversal — not from the 180-day breach date.

Ready to run this workflow?

A GSTAgent subscription code is required. CA firm plans from ₹1,400/month for 10 clients.

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