240/34/2024-GST — 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
Summary
Circular 240/34/2024: ITC for E-commerce Operators under Section 9(5) Explained
This GST circular clarifies how e-commerce operators (ECOs) can claim Input Tax Credit (ITC) when they are made liable to pay GST on certain services supplied through their platforms. This applies to services like passenger transport (e.g., Ola, Uber) and accommodation services (e.g., Airbnb, Oyo) where the supplier is not required to be registered under GST. Section 9(5) of the CGST Act makes the ECO responsible for paying GST in these specific scenarios.
The circular essentially says that ECOs can claim ITC on taxes paid on goods and services used in providing these section 9(5) services. This includes things like software, cloud services, and other operational costs directly related to their platform operations. The key requirement is that the ECO must clearly demonstrate that these inputs are used to provide the taxable services where they are paying GST under section 9(5). This ensures there is no double taxation or misuse of ITC.
ECOs who operate platforms where GST is paid under section 9(5) should review their ITC claims to ensure they are adhering to this clarification. They need to properly document the use of their inputs towards these specific services to avoid future disputes. The effective date for this clarification is the date of issue of the circular, December 31, 2024. Therefore, ECOs should implement these guidelines immediately for their future GST returns.
Key Changes
| Change | Impact |
|---|---|
| Clarification on ITC eligibility for ECOs on services notified under Section 9(5). | ECOs are generally eligible for ITC on inputs and input services used in providing their platform services, *even when they are liable to pay tax on supplies made through their platform under Section 9(5)*. |
| Specific examples provided for eligible and ineligible ITC. | Provides clarity and reduces ambiguity regarding the types of expenses on which ECOs can claim ITC, such as expenses related to maintaining the platform, marketing, and customer support. It clarifies that expenses related to the underlying services provided by the suppliers *through* the platform are not eligible for ITC for the ECO. |
| Addressing the concern that ECOs are paying tax as if they were the supplier without enjoying the associated ITC. | Reduces the tax burden on ECOs by allowing them to claim ITC on expenses related to their platform services, addressing a potential disadvantage arising from their liability under Section 9(5). |
| Condition for availment of ITC | ECOs can only avail ITC if they are not merely aggregators, but are responsible for paying tax on the underlying supplies. If the ECO is an aggregator, it cannot claim ITC on the specified supplies under 9(5). |