Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Why you lose the credit
The law ties your ITC to the supplier’s filing — no GSTR-1 from them means no GSTR-2B entry for you, so no claim.
Protect yourself
Track GSTR-2B monthly, chase non-filing suppliers, and use contract terms that let you withhold the GST portion until they file.
Practical protection in contracts and process
Because Section 16(2)(aa) and (c) tie your credit to the supplier actually reporting and paying, a non-filing or defaulting supplier directly costs you money. Build protection into both your contracts and your monthly process. In the contract, make the GST portion of any payment conditional on the invoice appearing in your GSTR-2B, and reserve the right to recover from the supplier any credit you lose, plus interest, if they don’t file. In process, reconcile the 2B to your purchase register every month, rate or flag suppliers by their filing reliability, and prefer compliant vendors for large or recurring spend. Where an invoice is missing, contact the supplier early in the month with the specific details and a deadline to file or amend, and hold the tax component until it shows. For a one-off default, weigh the credit at stake against the relationship. Over time, a simple vendor-compliance scorecard — who files on time, whose credit regularly slips — lets you concentrate spend on reliable suppliers and stop the slow leak of unclaimable credit. The law puts the risk on the buyer, so the buyer’s controls are what contain it.