Clarification in respect of input tax credit availed by electronic commerce operators where services specified under Section 9(5) of Central Goods and Services Tax Act, 2017 are supplied through their platform

Circular No.: 240/34/2024-GST
Date of Circular: 31st December 2024
Relevant Sections and Rules:

• Section 9(5), CGST Act, 2017 – Tax liability of Electronic Commerce Operators (ECOs) for specified services
• Section 17(1), 17(2), 168(1), CGST Act – Apportionment and input tax credit (ITC) conditions
• Circular Referred: Circular No. 167/23/2021-GST dated 17.12.2021

Clarification on Input Tax Credit (ITC) for ECOs for Services Notified Under Section 9(5)

1. Applicability of Section 9(5):
   ECOs are liable to pay GST on specified services notified under Section 9(5) of the CGST Act (such as ride-hailing, housekeeping, restaurant services, etc.) as if they are the suppliers.
2. Dual Nature of ECO Activities:
   ECOs operate in two capacities:
   i. As a deemed supplier for services under Section 9(5), liable to pay tax in cash.
   ii. For their own services (like platform fee/commission), where they raise invoices and avail ITC on inputs and input services.
3. No ITC Reversal Required for 9(5) Services:
   It is clarified that:

• ECOs are not required to reverse proportionate ITC under Section 17(1) or 17(2) for inputs/input services used in facilitating 9(5) services.
• This applies to all notified services under Section 9(5), not just restaurant services.

✅ ECOs can retain full ITC even if some of it relates to 9(5) services.

4. Payment Restriction – Cash Only for 9(5) Services:

• Although ITC can be availed, it cannot be used to pay tax liability under Section 9(5).
• Such GST liability must be paid entirely in cash through the electronic cash ledger.

5. Use of ITC:

• The ITC availed for inputs/input services related to 9(5) supplies can be used to discharge tax liability for ECO’s own supplies, but not for 9(5) liabilities.

Source: Circular No.: 240/34/2024-GST