Issued by the Government of India, Ministry of Finance, Central Board of Indirect Taxes and Customs (CBIC), GST Policy Wing
Circular No. 240/34/2024-GST | Dated: December 31, 2024
In continuation of the guidance provided in Circular No. 167/23/2021-GST dated December 17, 2021, the CBIC has issued a clarification regarding the treatment of Input Tax Credit (ITC) availed by electronic commerce operators (ECOs) for services covered under Section 9(5) of the Central Goods and Services Tax Act, 2017 (CGST Act). This circular addresses concerns raised about the requirement for ITC reversal in relation to services other than restaurant services supplied through electronic platforms.
Key Clarifications:
- Nature of Supplies by ECOs:
ECOs that are liable to pay tax under Section 9(5) of the CGST Act engage in two types of supplies:
- Notified Supplies: Services specified under Section 9(5) for which the ECO is deemed the supplier and liable to pay GST.
- Platform Services: Services offered by the ECO, such as platform fees or commissions, where ITC is availed for input goods and services.
- Treatment of ITC:
- The principles established in Circular No. 167/23/2021-GST regarding restaurant services are extended to other notified services under Section 9(5).
- ECOs are not required to reverse proportionate ITC for inputs and input services related to supplies made under Section 9(5).
- ITC cannot be utilized to discharge tax liabilities under Section 9(5), which must be paid entirely through the electronic cash ledger. However, ITC remains available for offsetting GST liabilities arising from the ECO’s own platform services.
- Uniform Implementation:
To ensure consistency across field formations, this clarification reiterates that the ITC mechanism and payment method described above apply uniformly to all services specified under Section 9(5). - Action for Trade and Industry:
The CBIC has instructed relevant authorities to issue trade notices to disseminate this information widely.
Guidance for Stakeholders:
ECOs must ensure compliance with the ITC provisions by:
- Maintaining proper records of input services and their utilization.
- Discharging GST liabilities under Section 9(5) solely via cash payments.
- Utilizing availed ITC strictly for their own service offerings.
Addressing Difficulties:
Stakeholders facing challenges in implementing these provisions are encouraged to bring their concerns to the CBIC for resolution.
For a detailed understanding, click here for the official circular issued by the CBIC. https://taxinformation.cbic.gov.in/view-pdf/1003254/ENG/Circulars
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