Section 41 provides that self assessed ITC shall be availed in return and same shall be reversed on non payment of tax by supplier

Section 41(1)

Every RP shall, subject to such conditions and restrictions as may be prescribed,

be entitled to avail the credit of eligible input tax, as self-assessed, in his return and

such amount shall be credited to his electronic credit ledger.

[1][Section 41(2)

ITC availed by a RP u/ss (1) in respect of such supplies of goods or/and services,

the tax payable whereon has not been paid by the supplier,

shall be reversed along with applicable interest, by the said person in such manner as may be prescribed:

[2][Rule 37A

Where ITC has been availed by a RP in GSTR-3B for a tax period in respect of such invoice/ DN, the details of which have been furnished by the supplier in statement of outward supplied in GSTR-1/GSTR-1A/IFF,

but GSTR-3B for tax period corresponding to the said statement of outward supplies has not been furnished by such supplier

till the 30th day of Sep following the end of FY in which the ITC in respect of such invoice/DN has been availed,

the said ITC shall be reversed by the said RP, while furnishing GSTR-3B on or before the 30th Nov following the end of such FY.

If supplier furnishes GSTR-1 but does pay tax through GSTR-3B of any tax period till 30^th Sep following the end of relevant FY, the recipient has to reverse such ITC without interest on or before 30^th Nov following the end of relevant FY.

1^st Proviso to Rule 37A

where the said ITC is not reversed by the RP in GSTR-3B on or before the 30th Nov following the end of such FY during which such ITC has been availed,

such amount shall be payable by the said person along with interest thereon u/s 50

1st Proviso to Section 41(2) read with 2^nd Proviso to Rule 37A

Where the said supplier subsequently makes payment through GSTR-3B for the said tax period,

the said RP may re-avail such ITC reversed by him in GSTR-3B for a tax period thereafter.

where the said supplier subsequently furnishes GSTR-3B for the said tax period, the said RP may re-avail the amount of such credit in GSTR-3B for a tax period thereafter.

Mr X (Recipient) purchase goods in June 2024 and Mr Y (the supplier) uploads the invoice in GSTR-1 of June 2024, so it's visible in GSTR-2B of Mr X for July 2024 .

Mr X can avail ITC in GSTR-3B of July 2024.

However, the supplier fails to file GSTR-3B for June 2024.

Supplier still hasn't filed by 30th Sept 2025 (end of deadline for FY 2024-25).

As per Rule 37A, Mr X must reverse this ITC in GSTR-3B for October 2025 (by 30th Nov 2025).

If supplier later files June 2024 GSTR-3B (say in Dec 2025), you can re-avail the ITC.

Section 41(2)

The credit referred to in sub-section (1) shall be utilised only for payment of self assessed output tax as per the return referred to in the said sub-section.