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New GST Rule Imposes Tax Liability on Buyers, May Impact Businesses

  • The new GST rule, Rule 37A, may have a negative impact on businesses.
  • The rule puts the burden of tax liability on the buyer if the seller does not pay the tax.
  • If the supplier does not have the money to pay the tax, the buyer will have to pay the tax and interest on their behalf.
  • The GST law requires the selling entity to file the GST return showing tax as per the bill issued.
  • Under the new rule, if the supplier only files GSTR 1 without filing GSTR 3B within the time limit, the buyer must pay the input tax credit (ITC) shown on the bill along with interest.
  • This puts a double burden on the buyer and may cause trouble for them.
  • Rule 37A states that any problems in the tax returns of the financial year 2022-23 must be checked and the portion of ITC reversed before November 30, 2023.
  • If this is not done, the buyer will have to pay the excess tax plus interest.


Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.


VAT news
VAT news