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payment to supplier

Payment to supplier within 3 months otherwise reverse with interest from the date of invoice u/s 16 (2) of GST Act.

Ancillary units of PSU’s and supporting manufacturers of big Indian manufacturers and MNC’s have upper/dominant role in delaying payment to the suppliers. This era is gone in GST.

In some sectors, there is practice of paying invoice amount after 60 or 90 or  180 days as per terms under an agreement. Even after submitting the bills, some MNC’s give the standard answer that their claims are under process.

I write this with authority as my own clients seek my advice what is to be done. This provision checkmates the delaying tactics as interest is to be paid by the MNC’s at the time of reversal and this cannot be passed on to suppliers as they are not at fault. This is a welcome measure for the suppliers of MNC’s.

There is objectionable practice of purchase of Cenvatable invoices in some sectors like Pharma and Steel which was effectively countered by DGCEI. This practice is now difficult as cash payments in excess of Rs.2 lakhs invites penalty by the receiver of cash. Plus do not underestimate the quality of inputs generated and data mining capacity of FIU ( Financial Intelligence Unit).

Income Tax and Enforcement Directorates will be alerted electronically leaving little chance for private settlements. When honest officers are given free hand, everyone will realize that honesty is always the best policy.

( Author –  CMA VSRM KASYAPA is a ST trainer and GST  Consultant, trained by ICMA, SIRC as Master Trainer in GST. He can be reached as kasyapavsrm@gmail.com, Contact-9550232838.)

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3 thoughts on “Payment to Supplier within 3 months or Reverse-GST

  1. V S Verma says:

    1.What is the procedure of the reversal ITC in case of non payment of Due within 180 days?
    2.And suppose I paid full payment after 180 days, say 200 day, can i get once again the credit which was reversed earlier?

  2. Kartik Oza says:

    Suppose I pay after due date to my supplier, (i.e. more than specified days by Govt.).
    Is there any compulsion to mention in GSTN portal to mention the date of payment of due? or How Govt will verify that i had made a late payment?

    1. Satya ND says:

      While conducting Audit they will verify system payments and give notice.

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