Circular No. 240/34/2024-GST dated 31.12.2024
Context
This circular builds on Circular No. 167/23/2021-GST dated December 17, 2021.
It addresses clarifications for ITC reversals related to services other than restaurant services supplied through ECOs under Section 9(5) of the CGST Act.
Key Clarifications
- Applicability of Section 9(5):
- ECOs must pay tax under Section 9(5) of the CGST Act for specified services as if they are the suppliers.
- For other services, such as platform fees or commissions, they charge their users directly.
- ITC Utilization Rules:
- ITC can be availed for inputs and input services used for providing their own platform-related services.
- ITC cannot be utilized for paying tax liabilities under Section 9(5); such liabilities must be paid entirely in cash.
- ITC Reversal:
- ECOs are not required to reverse ITC proportionally for supplies made under Section 9(5), ensuring alignment with Circular No. 167/23/2021-GST.
- Specific ITC Restrictions:
- ITC used for services provided by the ECO on their account can be utilized.
- ITC related to Section 9(5) services must not be used for payment of the associated tax liability.
- Implementation Guidance:
- Full tax liabilities under Section 9(5) are to be settled through electronic cash ledger only.
- This principle applies uniformly to all services specified under Section 9(5), beyond just restaurant services.
Conclusion
This circular provides clarity on ITC treatment and tax liability payment rules for ECOs under Section 9(5) of the CGST Act, ensuring consistency and ease of implementation across jurisdictions.