Clarification Regarding Requirement of Reversal of ITC by ECOs Liable to Pay Tax u/s 9(5) of CGST Act | Circular

Circular No. 240/34/2024-GST dated December 31st, 2024

The CBIC has clarified that an Electronic Commerce Operator (ECO) liable to pay tax under Section 9(5) of the CGST Act for specified services is not required to reverse the input tax credit (ITC) on inputs and input services under Sections 17(1) and 17(2) for such supplies.

Additionally, it has been clarified that the ECO will be required to pay the full tax liability for supplies made under section 9(5) only through the electronic cash ledger. The ITC availed on inputs and input services used to facilitate such supplies cannot be used to settle this tax liability. However, the credit availed by the ECO for such inputs and input services can be utilized for discharging any tax liability related to the supply of services made on the ECO’s own account.

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