Clarification on ITC availed by E-commerce Operator for services u/s 9(5).
GST Circular has been issued on ITC availed by E-commerce Operator for services u/s 9(5). This point has been proposed in 55th GST Council Meeting held on 21-12-2024.
Proposed Clarification in GST Council Meeting:
The GST Council has proposed clarification stating that E-commerce Operator like Zomato, Swiggy will not required to reverse the ITC for services like restaurants, because ECOs Operate as platforms and use input and services to provide their own services such as charging restaurants a commission.This clarification will confirm that Ecos will not have to reverse the ITC for any services they pay GST on under section 9(5), even if those services are taxed at rate of 5%.
Purpose of Issuing Circular No 240/34/2024:
The circular clarified that ECOs do not need to reverse ITC for restaurant services they facilitate and pay GST on and whether it is applicable on other services covered under Section 9(5) or not.
Issue as per circular: Whether electronic commerce operator, required to pay tax under section 9(5) of CGST Act, is liable to reverse proportionate input tax credit on his inputs and input services to the extent of supplies made under section 9(5) of the CGST Act.
Clarification : E- Commerce Operator who is liable to pay tax under section 9(5) of CGST Act in respect of specified services, is not required to reverse the ITC on his inputs and input services proportionately under section 17(1) or sectiJon 17(2) of CGST Act to the extent of supplies made under section 9(5) of CGST Act.
For the payment of GST liability for services u/s 9(5) of the CGST Act, e-commerce must use electronic cash ledger and can not use Input tax credit. They can utilise its ITC to offset GST on ECOs own services like commission , Platform fee etc.
