Important Keywords: Circular No. 242/36/2024 - GST, GST Place of Supply, online service POS, unregistered buyer GST, rule 46(f) CGST, GST OTT platform, GSTR-1 online services,
Words: 2644; Read time: 14 minute.
Table of Contents
Circular No. 242/36/2024 - GST F. No. CBIC-20001/14/2024-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing ******
North Block New Delhi, Dated the 31st December, 2024
Circular No. 242/36/2024 - GST: Clarification on place of supply of Online Services supplied by the suppliers of services to unregistered recipients
To, The Principal Chief Commissioners/ Chief Commissioners of Central Tax (All) The Principal Directors General/ Directors General (All)
Madam / Sir,
Sub: Clarification on place of supply of Online Services supplied by the suppliers of services to unregistered recipients-reg.
References have been received from field formations regarding non-compliance of provisions of mandatory recording of correct place of supply on the invoices by the suppliers in respect of online services provided by them, either themselves or through electronic commerce operators, to unregistered recipients due to wrong interpretation of provisions of section 12(2)(b) of Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as “IGST Act”) read with rule 46 of Central Goods and Services Rules, 2017 (hereinafter referred to as “CGST Rules”).
It has also been mentioned that though in such cases of taxable online supplies of services to unregistered recipients, registered suppliers are required to mention State name of the recipient on the invoice, irrespective of the value of such supply, and declare place of supply of such services as the State of the recipient as per the provisions of clause (i) of section 12(2)(b) of IGST Act but many suppliers are not recording the State name of the unregistered recipient on the invoice and are declaring place of supply of such services as the location of the supplier as per clause (ii) of section 12(2)(b) of IGST Act.
This is resulting in wrong declaration of place of supply, resulting in flow of revenue in respect of the said supply to the wrong State. Request has been made to clarify the issue so as to ensure correct declaration of place of supply by the suppliers of such services to unregistered recipients.
2. In order to clarify the issue and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168(1) of the Central Goods and Services Act, 2017 (hereinafter referred to as “CGST Act”) hereby issues the following clarification.
3. Legislative provisions: 3.1 As per sub-section (17) of section 2 of the IGST Act, ‘online information and database access or retrieval services’ means: “services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply impossible to ensure in the absence of information technology and includes electronic services such as,––
(i) advertising on the internet; (ii) providing cloud services; (iii)provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet; (iv) providing data or information, retrievable or otherwise, to any person in electronic form through a computer network; (v) online supplies of digital content (movies, television shows, music and the like); (vi) digital data storage; and (vii) online gaming, excluding the online money gaming as defined in clause (80B) of section 2 of the Central Goods and Services Tax Act, 2017 (12 of 2017);”
3.2 The term 'electronic commerce' has been defined under section 2(44) of CGST Act, as follows:
"electronic commerce" means the supply of goods or services or both, including digital products over digital or electronic network;
3.3 The term ‘electronic commerce operator' has been defined under section 2(45) of CGST Act, as follows: "electronic commerce operator" means any person who owns, operates or manages digital or electronic facility, or platform for electronic commerce;
3.4 Sub-section (2) of section 12 of the IGST Act, reads as follows: “(2) the place of supply of services, except the services specified in sub- section (3) to (14),-
(a) made to a registered person shall be the location of such person; (b) made to any person other than a registered person shall be, - (i) the location of the recipient where the address on record exists; and (ii) the location of the supplier of services in other cases.”
3.5 As per sub-section (2) of Section 31 of the CGST Act, “(2) A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed:”
3.6 Rule 46 of CGST Rules provides as below: " 46. Subject to rule 54, a tax invoice referred to in section 31 shall be issued by the registered person containing the following particulars, namely,- …
(f) name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is unregistered and where the value of the taxable supply is less than fifty thousand rupees and the recipient requests that such details be recorded in the tax invoice;
Provided that in cases involving supply of online money gaming or in cases that where any taxable service is supplied by or through an electronic commerce operator or by a supplier of online information and database access or retrieval services to a recipient who is unregistered, irrespective of the value of such supply, a tax invoice issued by the registered person shall contain the name of the State of the recipient and the same shall be deemed to be the address on record of the recipient;…..”
4. Clarification: 4.1 Section 12 of the IGST Act provides that except in cases specified in sub-sections (3) to (14) of the said section, when the services are supplied to a registered person, the place of supply of services shall be the location of the recipient and when the services are supplied to an unregistered person, the place of supply of the said services shall be the location of the recipient, if his address is available on record, and shall be the location of the supplier, if the address is not available on record.
4.2 Section 31(2) of the CGST Act provides that a registered person providing taxable services must issue a tax invoice with details like the service description, value, tax charged and such other particulars as may be prescribed.
4.3 Rule 46 of CGST Rules provides the particulars required to be mentioned on the tax invoice. Clause (f) of the said rule provides for mentioning some details on the invoice in case of supplies made to unregistered recipient.
Further, proviso to clause (f) of rule 46 of the CGST Rules provides that in cases involving the supply of online money gaming or involving supply of any taxable services by or through an electronic-commerce operator or by a supplier of online information and database access or retrieval services, to an unregistered recipient, irrespective of the value of the said supply, the tax invoice issued by the registered supplier must contain the recipient's State name. It has also been provided in the said proviso that such State name shall be deemed to be the address on record of the recipient.
4.4 A conjoint reading of clause (b) of sub-section (2) of Section 12 of the IGST Act, sub section (2) of Section 31 of the CGST Act and proviso to rule 46(f) of CGST Rules leads to a conclusion that in respect of supply of services made to unregistered persons, irrespective of the value of the said supply, the supplier is required to mandatorily record the name of the State of the unregistered recipient on the tax invoice, in cases involving supply of online money gaming or supply of taxable services by or through an electronic commerce operator or supply of online information and database access or retrieval (OIDAR) services.
Recording of the name of State of the unregistered recipient on the tax invoice in respect of such supply of services shall be deemed as the address on record of the recipient for the purpose of determination of place of supply of the said services under section 12(2)(b) of IGST Act.
Accordingly, in such cases, the place of supply of such services shall be considered as the location of the recipient of the services as per provisions of clause (i) of section 12(2)(b) of IGST Act.
4.5 It is also observed that a combined reading of the definitions of ‘electronic commerce’ and ‘electronic commerce operator’ as per section 2(44) and section 2(45) of CGST Act, along with rule 46(f) of CGST Rules, leads to an understanding that all services supplied to unregistered recipients over digital or electronic network, either by the supplier using his own digital or electronic facility / platform or through any other electronic or digital platform owned and operated by an independent electronic commerce operator, will be covered under proviso to rule 46(f) of CGST Rules.
4.5.1 It is, accordingly, clarified that provisions of proviso to rule 46(f) of CGST Rules shall be applicable in respect of all the online supplies of services supplied to an unregistered recipient, in addition to the supply of online money gaming and OIDAR services. Some of the examples of such services are subscription of e-newspapers and e-magazines, online subscription of entertainment services (e.g. OTT platforms), online telecom services, digital services through mobile applications etc.
Therefore, in respect of supply of any such online/ digital services, OIDAR services and online money gaming to unregistered recipients, the suppliers are mandatorily required to record the name of the State of the recipient on the tax invoice, irrespective of the value of supply of such services, and to declare place of supply of the said services as the location of the recipient (based on the name of State of the recipient) in their details of outward supplies in FORM GSTR-1/1A.
4.5.2 For the purpose of recording the name of the State of the recipient on tax invoice in respect of such supplies made to unregistered persons for such online services, supplier should devise suitable mechanism to ensure collection of such details from unregistered recipient before making any supplies to him.
As mentioned above, in such cases, the name of the State of the recipient so recorded shall be deemed to be the address of recipient available on record and thus, for determining place of supply of the said services, provisions of section 12(2)(b)(i) of IGST Act will be applicable as per which the place of supply shall be the location of the recipient.
4.5.3 It is also mentioned that if the supplier fails to issue invoice in accordance with the said provisions by not recording correct mandatory particulars, including recording of name of State of unregistered recipient in respect of such supplies, he may be liable to penal action under the provisions of section 122(3)(e) of CGST Act.
5. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
6. Difficulty, if any, in the implementation of this circular may be brought to the notice of the Board. Hindi version would follow.
(Sanjay Mangal) Principal Commissioner (GST)
📚 Frequently Asked Questions (FAQs)
Q1: What is the key clarification under Circular No. 242/36/2024-GST?
Answer: The circular clarifies the correct “place of supply” (POS) in cases where online services are supplied to unregistered recipients—whether directly by suppliers or via e-commerce platforms. It mandates recording the recipient's State on invoices to ensure proper GST jurisdiction and tax flow. 📢 Finodha can guide your GST billing compliance: https://finodha.in/gst-compliance/ —
Q2: Which services are impacted by this clarification?
Answer: The clarification covers: OTT subscriptions (Netflix, Disney+) E-magazines/e-newspapers Online telecom (VoIP, digital plans) OIDAR services (cloud, music, software) Online gaming (excluding money gaming) Any taxable service through a digital platform to an unregistered person —
Q3: What must be recorded on the invoice for such services?
Answer: The supplier must: ✔️ Mention the name of the State of the unregistered recipient ✔️ Declare that State as the place of supply in GSTR-1 ✔️ Consider this State name as the “address on record” under IGST Act Even if the value of supply is below ₹50,000, this rule applies. —
Q4: What is the legal basis for this clarification?
Answer: It’s based on: Section 12(2)(b)(i) of the IGST Act (POS = recipient’s location) Rule 46(f) of CGST Rules (mandatory invoice info) Section 31(2) of CGST Act (invoice issuance mandate) 🧾 Need expert support on Rule 46 invoicing? Finodha helps: https://finodha.in/gst-return-filing/ —
Q5: What happens if the supplier records their own State as POS instead?
Answer: ❌ This misroutes GST to the wrong State, violating IGST provisions. 📛 Consequences may include penalties under Section 122(3)(e) of CGST Act for incorrect invoicing. 🛡️ Avoid penalties—get your tax invoices reviewed by Finodha’s experts. —
Q6: Does the clarification apply to services via electronic commerce operators (ECOs)?
Answer: Yes ✅. Services supplied via ECOs—like booking platforms, digital app stores, or online marketplaces—are fully covered. This includes both direct and indirect digital supply modes to unregistered recipients. —
Q7: How is “address on record” interpreted here?
Answer: For these online services, the name of the recipient's State as recorded on the invoice is considered the address on record—even if other details (like PIN code or street) are missing. This satisfies the “known address” requirement under Section 12(2)(b)(i) of IGST. —
Q8: What if the recipient’s State is not collected during onboarding or checkout?
Answer: The supplier is obligated to implement a mechanism to collect the State information upfront (e.g., via registration, subscription form, app signup, or payment gateway). Failure to do so can result in non-compliance. ⚙️ Finodha helps you automate POS collection for GST compliance. —
Q9: What are the filing implications in GSTR-1?
Answer: In GSTR-1 or GSTR-1A, the supplier must: ✔️ Report POS as the State of the recipient (not supplier) ✔️ Ensure proper tax split for IGST/CGST-SGST as per destination ✔️ Reflect consistent details in invoice vs return 🧾 Finodha provides automated GSTR-1 compliance support. —
Q10: Can I still issue consolidated invoices for digital services?
Answer: Not for these supplies. Each invoice must contain recipient’s State name—even if for small-value digital subscriptions. This applies irrespective of whether supplied via an app, web portal, or third-party aggregator. 🛍️ For SaaS providers, OTT, digital publishers—this rule is critical. —
✅ Final Summary:
Circular No. 242/36/2024-GST resolves ambiguity on the place of supply of online services to unregistered persons. It mandates recording the recipient’s State on invoices and treating that State as POS. This ensures GST is credited to the correct State and avoids disputes.
📌 Non-compliance could invite penalties—especially for SaaS, OTT, OIDAR, and digital platforms.
🚀 Let Finodha help you with: 🔹 POS compliance automation 🔹 Digital service invoicing structure 🔹 GSTR-1 filing with correct State-wise tax reporting 🔹 GST registration for digital service providers → https://finodha.in/online-gst-registration/ 🔹 Business setup and tax advisory → https://finodha.in/setup-business/
Circular No. 241/35/2024 - GST F. No. CBIC-20001/14/2024-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing
North Block, New Delhi, Dated the 31st December, 2024
Circular No. 241/35/2024 - GST: Clarification on availability of input tax credit as per clause (b) of sub-section (2) of section 16 of the Central Goods and Services Tax Act, 2017 in respect of goods which have been delivered by the supplier at his place of business under Ex-Works Contract
To, The Principal Chief Commissioners/ Chief Commissioners of Central Tax (All) The Principal Directors General/ Directors General (All)
Madam / Sir,
Subject: Clarification on availability of input tax credit as per clause (b) of sub section (2) of section 16 of the Central Goods and Services Tax Act, 2017 in respect of goods which have been delivered by the supplier at his place of business under Ex-Works Contract-reg.
Reference has been received from automobile sector seeking clarification on availability of input tax credit (hereinafter referred to as “ITC”) as per clause (b) of sub section (2) of section 16 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”) in respect of goods which have been delivered by the supplier at his place of business under Ex-Works Contract.
1.2 It has been stated that in automobile sector, the contract between the automobile dealers and the Original Equipment Manufacturers (OEMs) is generally an Ex-Works (EXW) contract, and as per the terms of the contract, the property in goods (i.e. vehicles) passes to the dealer at the factory gate of the OEM, when the goods are handed over to the transporter at the instance of the dealer, and the delivery on the part of the OEM is complete at his factory gate.
The transport may be arranged by the OEM on behalf of the dealer and where insurance is arranged, it may also be done on behalf of the dealer. Any claim in case of loss has to be lodged by the dealer. The dealer also duly accounts for the invoice in his books of accounts on such delivery of the vehicles at the factory gate of the OEM. The dealer avails ITC on the date the vehicles are billed to him and handed over to the transporter by the OEM at his factory gate.
However, some field formations are taking a view that ITC can be availed by the dealer only after the vehicles are physically received by him at his business premises and show cause notices have been issued to a number of dealers, demanding tax for wrongful availment of ITC for contravention of provisions of clause (b) of sub-section (2) of section 16 of the CGST Act.
2. In order to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by sub-section (1) of section 168 of the CGST Act, hereby clarifies the issue as below.
3. Sub-section (2) of section 16 of the CGST Act is a non-obstante clause to section 16 of the CGST Act which enlists the conditions, failing which the registered person is not entitled to ITC in respect of supply of goods or services or both. One of the conditions as per clause (b) of the said sub-section (reproduced below) is that a registered person is not entitled to claim ITC in respect of any supply of goods or services or both unless he has “received” the said goods or services or both.
The Explanation to the said clause provides for deemed receipt of goods and services in certain scenarios. “Section 16. Eligibility and conditions for taking input tax credit.…
(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless, - … (b) he has received the goods or services or both.
Explanation.- For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services- (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;
(ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person;…”
3.1 From a plain reading of the clause (b) of sub-section (2) of section 16 of the CGST Act, it is quite apparent that there is no reference of any particular place where goods are required to be “received” by the registered person.
This is in contrast to the erstwhile Central Excise regime, where the provisions contemplated physical receipt of the goods at the factory of the manufacturer for taking CENVAT credit on the said goods. In most of the State VAT Acts, the provisions related to credit of the input tax did not have any explicit mention of physical receipt of goods at any particular place and input tax credit was allowed on purchase of goods.
3.2 Explanation to clause (b) of sub-section (2) of section 16 of the CGST Act provides that the goods would be deemed to have been “received” by the registered person for the purpose of this clause, where:
a) the goods are delivered by the supplier to a recipient or to any other person on the direction of such registered person, whether acting as an agent or otherwise; b) such direction may be given before or during movement of goods; and c) the goods may be delivered either by way of transfer of documents of title to goods or otherwise.
3.2.1 The said Explanation provides that where goods are delivered by the supplier to any other person, whether acting as an agent or not, upon the direction of the registered person, and where such delivery occurs either through transfer of documents of title to goods or otherwise, the registered person is deemed to have “received” such goods for the purpose of the clause (b) of sub-section (2) of section 16 of CGST Act.
Accordingly, in cases where goods are delivered by the supplier to the registered person, either directly or to any other person on the directions of the said registered person, the registered person shall be considered to have “received” the said goods for the purpose of clause (b) of sub-section (2) of section 16 of CGST Act.
3.3 OEM: In the instant case, as per the terms of the EXW contract between the dealer and the
a) the goods are being handed over by the OEM to the transporter at his factory gate for onward transmission to the dealer; b) transport is arranged by OEM on the behalf of dealer; and c) if insurance is arranged, it is done on the behalf of dealer and any claim in case of loss has to be lodged by the dealer.
3.3.1 In such a scenario, the property in the said goods can be considered to have been passed on to the dealer by the OEM upon handing over of the said goods to the transporter at his factory gate, meaning thereby that the goods can be considered to have been delivered to the registered person (the dealer), through the transporter,
by the supplier (the OEM) at his factory gate and the supply of the said goods can be considered to have fructified at the factory gate of the OEM, even though the goods may be physically received by the registered person (the dealer) after the transit period.
Accordingly, it is clarified that as per Explanation to clause (b) of sub-section (2) of section 16 of CGST Act, the registered person (the dealer) can be considered to have “received” the said goods at the time of such handing over of the goods by the supplier to the transporter, at his factory gate, for their onward transmission to the said registered person (the dealer).
3.4 The same principle is applicable in respect of supply of other goods also where the contract between the supplier and recipient is an EXW contract, and as per terms of the contract, the goods are to be delivered by the supplier to the recipient, or to any other person (including a transporter) on behalf of the recipient, at his (supplier’s) place of business and the property in the goods stands transferred to the recipient at the time of such handing over.
In such cases, the said goods can be construed to have been “received” by the said recipient at the time of handing over the said goods to the recipient or to the transporter, as the case may be, as per provisions of clause (b) of sub-section (2) of section 16 of CGST Act.
3.5 It is also mentioned that as per provisions of sub-section (1) of section 16 of the CGST Act, a registered person is entitled to input tax credit only in respect of supply of goods or services or both, which is used or intended to be used in the course or furtherance of business.
Therefore, the input tax credit may be available to the registered person on such receipt of goods by the said registered person from the supplier at his (supplier’s) factory gate or business premises, subject to fulfilment of other conditions of section 16 and section 17 of CGST Act, including the condition that the said goods are used or intended to be used in the course or furtherance of business by the said registered person.
3.6 It is also to be noted that if the goods are found to have been diverted for non-business purposes at any stage, either before physically receiving the said goods at his business premises or subsequently, the registered person shall not be entitled to input tax credit on such goods in terms of sub-section (1) of section 16 of CGST Act.
Further, if at any time after “receiving” the goods, such goods are lost, stolen, destroyed, written off or disposed of by way of gift or free samples, the registered person would not be entitled to the input tax credit in respect of such goods as per provisions of clause (h) of sub-section (5) of section 17 of CGST Act.
4. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
5. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the Board.
Q1: What does Circular No. 241/35/2024 - GST clarify?
Answer: This circular clarifies the conditions under which a registered person (typically a dealer) can claim Input Tax Credit (ITC) when goods are delivered under an Ex-Works (EXW) contract at the supplier's premises. It addresses concerns particularly from the automobile industry regarding clause (b) of section 16(2) of the CGST Act, 2017. 🌐 For expert GST guidance, visit: https://finodha.in/gst-compliance/ —
Q2: What is clause (b) of section 16(2) of the CGST Act?
Answer: Clause (b) of section 16(2) mandates that ITC can only be availed if the registered person has “received” the goods. The Explanation to this clause deems goods as “received” if delivered to any person (including a transporter) on the registered person’s direction, even before actual physical delivery. 📑 Learn more about GST registration and ITC eligibility: https://finodha.in/online-gst-registration/ —
Q3: What is an Ex-Works (EXW) contract in the GST context?
Answer: In an Ex-Works contract, the supplier (e.g., an OEM) delivers the goods to the transporter at their premises, and ownership transfers at that point. The recipient (e.g., the dealer) arranges for transportation and bears all post-factory risks and costs, including insurance and delivery. 🚗 Common in automobile sector between OEMs and dealers. —
Q4: Can the dealer claim ITC when goods are handed over at the OEM’s factory gate?
Answer: Yes ✅. As clarified by Circular No. 241/35/2024-GST, when goods are handed over to the transporter at the OEM’s premises, and the transporter is arranged on behalf of the dealer, the goods are deemed “received” by the dealer. Hence, ITC is admissible from that point onward. 🔐 Finodha ensures your GST ITC claim is audit-proof: https://finodha.in/gst-return-filing/ —
Q5: What if the goods are later diverted or lost in transit?
Answer: In such cases, ITC may be denied. As per section 17(5)(h) of the CGST Act, ITC is not allowed if goods are lost, destroyed, or disposed of as free samples after being deemed “received.” The goods must be used in the course of business to retain ITC entitlement. 📦 For risk-managed GST compliance, consult: https://finodha.in/private-limited-company/ —
Q6: Does physical receipt of goods matter under GST law?
Answer: Not necessarily. The CGST Act allows for deemed receipt under certain conditions—like delivery to a transporter on behalf of the buyer. Physical possession at the buyer's premises is not required if title and risk are transferred earlier, as in EXW arrangements. 💡 This differs from older Excise or VAT regimes which required physical receipt at factory/warehouse. —
Q7: Is this clarification applicable only to automobiles?
Answer: No. While the clarification was sought by the automobile sector, the principles apply to all supplies under Ex-Works terms where delivery is made to a transporter or third party on behalf of the buyer and ownership transfers at the supplier’s location. —
Q8: What documentation should dealers maintain for ITC under EXW contracts?
Answer: ✔️ Copy of the tax invoice ✔️ Delivery challans and e-way bills ✔️ Transporter's acknowledgment ✔️ Contract terms indicating EXW supply ✔️ Proof of insurance (if applicable) 🧾 Documentation is key—Finodha assists with GST audit readiness. —
Q9: What happens if goods are diverted for personal use?
Answer: If goods are used for non-business purposes or are diverted, ITC must be reversed. The law requires that goods be used in the course or furtherance of business to qualify for ITC under section 16(1) of the CGST Act. 🛡️ Finodha ensures your claims stay legitimate and documented. —
Q10: How can Finodha help dealers and OEMs with GST ITC compliance?
Answer: Finodha offers: GST filing for OEMs and dealers ITC ledger review and reconciliation Custom advisory on Ex-Works contracts Real-time GSTR-2B validation Business setup and tax registration Get started here → https://finodha.in/setup-business/ —
✅ Final Summary:
Circular 241/35/2024-GST clarifies that ITC can be claimed by a dealer under an Ex-Works contract when the supplier hands over goods to a transporter on behalf of the dealer. This delivery fulfills the “receipt” condition under section 16(2)(b) of the CGST Act—if other ITC conditions are met.
📌 Maximize ITC and reduce audit risks—Finodha’s GST specialists are here to help. Explore full services → https://finodha.in/gst-compliance/
Important Keywords: Circular No. 240/34/2024 - GST, ITC for e-commerce operators, section 9(5) CGST Act, Input Tax Credit ECO, GST on food delivery, ride-hailing GST ITC,
Words: 1576; Read time: 8 minute.
Table of Contents
Circular No. 240/34/2024 - GST F. No. CBIC-20001/14/2024-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing
North Block, New Delhi, Dated the 31st December, 2024
Circular No. 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
To,
The Principal Chief Commissioners/ Chief Commissioners of Central Tax (All) The Principal Directors General/ Directors General (All)
Madam / Sir,
Sub: 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 -reg.
Reference is invited to Circular No. 167/23/2021 – GST dated 17.12.2021 which clarified that electronic commerce operators (hereinafter referred to as “ECOs”) required to pay tax under section 9(5) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”) are not required to reverse input tax credit (ITC) in respect of supply of restaurant services through their platform (notified services under section 9(5)). In this regard, representations have been received seeking clarification regarding requirement of reversal of ITC, if any, in respect of supply of services, other than restaurant services, under section 9(5) of CGST Act.
2. The issue has been examined and to ensure uniformity in the implementation of the law across the field formations, the Board, in exercise of its powers conferred under section 168(1) of the CGST Act, hereby clarifies the issue as below:
S. No
Issue
Clarification
1.
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.
1. ECO, required to pay tax under section 9(5) of CGST Act, is making supplies under two counts: i. Supplies notified under section 9(5) of CGST Act for which he is liable to pay tax as if he is the supplier of the said services. ii. Supply of his own services by providing his electronic platform for which he charges platform fee /commission etc. from the platform users. 2. For providing the services mentioned at 1(ii) above, the ECO procures inputs as well as input services for which he avails Input Tax Credit. 3. It has been clarified vide question no. 6 of Circular No. 167/23/2021 – GST dated 17.12.2021 that the ECO shall not be required to reverse input tax credit on account of restaurant services on which he pays tax under section 9(5) of the CGST Act. It has also been clarified that the input tax credit will not be allowed to be utilized for payment of tax liability under section 9(5) and whole of the tax liability under section 9(5) will be required to be paid in cash. 4. The principle, which has been outlined in question no. 6 of Circular No. 167/23/2021 – GST dated 17.12.2021, also applies to the supplies made in respect of other services specified under section 9(5) of CGST Act. 5. In view of this, it is clarified that Electronic Commerce Operator, who is liable to pay tax under section 9(5) of the CGST Act in respect of specified services, is not required to reverse the input tax credit on his inputs and input services proportionately under section 17(1) or section 17(2) of CGST Act to the extent of supplies made under section 9(5) of the CGST Act. 6. It is further clarified that ECO will be required to pay the full tax liability on account of supplies under section 9(5) of the CGST Act only through electronic cash ledger. The credit availed by him in relation to the inputs and input services used to facilitate such supplies cannot be used for discharge of such tax liability under section 9(5) of the CGST Act. However, such credit can be utilized by him for discharge of tax liability in respect of supply of services on his own account.
It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
Difficulty, if any, in implementation of this Circular may be brought to the notice of the Board.
Hindi version would follow.
(Sanjay Mangal) Principal Commissioner (GST)
📚 Frequently Asked Questions (FAQs)
Q1: What is Circular No. 240/34/2024-GST about?
Answer: This circular clarifies whether electronic commerce operators (ECOs) can claim Input Tax Credit (ITC) on services they supply under Section 9(5) of the CGST Act, 2017. These services include passenger transport (e.g., Uber, Ola), accommodation booking, food delivery (e.g., Zomato, Swiggy), and housekeeping, where the ECO is liable to pay GST on behalf of the service provider. 💼 Need GST structuring help for your platform? Talk to Finodha: https://finodha.in/gst-compliance/ —
Q2: Can ECOs claim ITC for services they are deemed suppliers for under Section 9(5)?
Answer: Yes ✅. As clarified by the CBIC, ECOs are entitled to claim ITC on input services, goods, or capital goods used in supplying Section 9(5) services—subject to Section 16 and 17 conditions. ⚠️ ITC must not be blocked under Section 17(5) (e.g., personal consumption, motor vehicles, etc.). —
Q3: What are Section 9(5) services under CGST?
Answer: Services notified under Section 9(5) include: 🚖 Passenger transport by radio-taxi (e.g., Uber, Rapido) 🍔 Restaurant services supplied through ECOs (e.g., Zomato, Swiggy) 🏠 Accommodation (e.g., OYO, Airbnb) 🧹 Housekeeping Under these, ECOs are treated as the supplier and are liable to pay GST. —
Q4: What does “ECO being treated as supplier” mean under Section 9(5)?
Answer: It means the ECO, not the actual service provider, is considered the supplier for GST purposes. Thus, the ECO must: Discharge GST liability Issue tax invoice (in most cases) Maintain proper records Can claim ITC (as now clarified by Circular 240) 📈 Need help reconciling ITC across GSTR-2B, 3B, and invoices? Finodha’s experts handle this: https://finodha.in/gst-return-filing/ —
Q5: Can an ECO claim ITC on software subscriptions or ad spends used for 9(5) services?
Answer: Yes. If these inputs are used directly in the course of supplying Section 9(5) services (e.g., running app infrastructure, marketing food delivery), the ITC can be claimed—unless restricted under Section 17(5). —
Q6: Can ECOs take ITC on logistics and delivery charges related to restaurant supplies?
Answer: Only if such charges are booked as expenses used in the course of Section 9(5) supplies. If the logistics vendor issues GST invoices to the ECO and conditions under Section 16 are satisfied, ITC is allowed. 🚚 Finodha can validate your logistics-related ITC with matching & reconciliation tools. —
Q7: What documentation should ECOs maintain to support ITC claims?
Answer: ✔️ Valid GST invoices from registered vendors ✔️ Expense reports linking to 9(5) operations ✔️ Reconciliation with GSTR-2B ✔️ Proper classification in ERP/accounting system 🔐 Strong documentation = ITC sustainability during GST audits. —
Q8: Will claiming ITC affect the TCS collected by ECOs under Section 52?
Answer: No. TCS under Section 52 pertains to other categories where the ECO is not liable to pay GST but collects it from the supplier. Section 9(5) overrides that by making the ECO directly liable—and thus eligible for ITC (subject to other provisions). —
Q9: Are there any conditions or disqualifications for claiming ITC under Circular 240/34/2024?
Answer: Yes. ITC will not be allowed if: ❌ Goods/services used for personal consumption ❌ Blocked under Section 17(5) ❌ Vendor invoice is not uploaded in GSTR-1 (check GSTR-2B) ❌ ITC claimed after time limit under Section 16(4) 🛡️ Finodha ensures your claims stay within limits and withstand audit scrutiny. —
Q10: How does Finodha help ECOs manage GST on Section 9(5) services?
Answer: Finodha provides: Expert guidance on ECO tax structuring GSTR-1 & 3B return filing ITC reconciliation & claim strategy Custom tax advisory for ride-hailing, food delivery & gig platforms Business setup, MSME, and ROC compliance for tech startups Start here → https://finodha.in/setup-business/
✅ Final Summary:
Circular 240/34/2024 - GST brings long-awaited clarity on ITC entitlement for ECOs supplying services under Section 9(5). With proper documentation and compliance, platforms like Uber, Swiggy, and OYO can claim eligible ITC on inputs used to support these services.
🔍 Still unsure about your ITC eligibility or vendor alignment? Get a customized GST audit from Finodha → https://finodha.in/gst-compliance/
Circular No. 237/31/2024-GST F. No. CBIC-20001/6/2024-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing *******
New Delhi, dated the 15th October, 2024
Circular No. 237/31/2024 - GST: Clarifying the issues regarding implementation of provisions of sub-section (5) and sub-section (6) in section 16 of CGST Act,2017.
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All) The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarifying the issues regarding implementation of provisions of sub-section (5) and sub-section (6) in section 16 of CGST Act, 2017-reg.
Reference is invited to sub-section (5) and sub-section (6) of section 16 of the Central Goods & Services Tax Act, 2017 (hereinafter referred to as the “CGST Act”) inserted in section 16 of the CGST Act, with effect from the 1st day of July, 2017, vide section 118 of the Finance (No. 2) Act, 2024, whereby the time limit to avail input tax credit under provisions of sub-section (4) of section 16 of CGST Act has been retrospectively extended in certain specified cases.
1.2 Sub-section (4), sub-section (5) and sub-section (6) of section 16 of the CGST Act are reproduced below for ready reference: “(4)A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.
Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub section (1) of section 37 till the due date for furnishing the details under sub section (1) of said section for the month of March, 2019.
(5) Notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered personshall be entitled to take input tax credit in any return under section 39 which is filed upto the thirtieth day of November, 2021.
(6) Where registration of a registered person is cancelled under section 29 and subsequently the cancellation of registration is revoked by any order, either under section 30 or pursuant to any order made by the Appellate Authority or the Appellate Tribunal or court and where availment of input tax credit in respect of an invoice or debit note was not restricted under sub-section (4) on the date of order of cancellation of registration, the said person shall be entitled to take the input tax credit in respect of such invoice or debit note for supply of goods or services or both, in a return under section 39,––
(i) filed upto thirtieth day of November following the financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier; or
(ii) for the period from the date of cancellation of registration or the effective date of cancellation of registration, as the case may be, till the date of order of revocation of cancellation of registration, where such return is filed within thirty days from the date of order of revocation of cancellation of registration, whichever is later.”
1.3 Further, it has been provided in section 150 of the Finance (No.2) Act, 2024 (reproduced below), that no refund of any tax paid or the input tax credit reversed shall be granted on account of the said retrospective insertion of sub-section (5) and sub-section (6) of section 16 of the CGST Act.
“150. No refund shall be made of all the tax paid or the input tax credit reversed, which would not have been so paid, or not reversed, had section 118 been in force at all material times.”
1.4 Besides, vide Notification No. 22/2024 –Central tax dated 08.10.2024, a special procedure for rectification of orders has been notified under section 148 of the CGST Act, to be followed by the class of taxable persons, against whom orders under section 73 or section 74 or section 107 or section 108 of the CGST Act have been issued confirming demand for wrong availment of input tax credit on account of contravention of provisions of sub-section (4) of section 16 of the CGST Act,
but where such input tax credit is now available as per the provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act, and where appeal against the said order has not been filed.
1.5 Representations have been received from trade and industry requesting for clarification in respect of various issues pertaining to availment of benefit of the said in section 16 of CGST Act to the taxpayers against whom demands have been issued alleging wrong availment of input tax credit in contravention of provisions of sub section (4) of section 16 of CGST Act, who are now entitled to avail the said input tax credit as per the retrospectively inserted provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act.
In order to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the CGST Act, hereby clarifies the issues as below.
The following action may be taken by the tax authorities and/ or the taxpayers in various scenarios for availment of benefit on account of retrospectively inserted provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act:
3.1 Where no demand notice/statement has been issued under section 73 or section 74 of the CGST Act: In cases, where any investigation/proceedings in respect of wrong availment of input tax credit alleging contravention of provisions of sub-section (4) of section 16 of the CGST Act has been initiated, but no demand notice/statement under section 73 or section 74 of the said Act has been issued,
and taxpayers are now entitled to avail the said input tax credit under the provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act, the proper office shall take cognizance of the sub-section (5) or sub-section (6) of section 16 of CGST Act, inserted retrospectively with effect from 01.07.2017 and take further appropriate action.
This also includes the cases where an intimation in FORM DRC-01A has been issued under rule 142(1A) of the CGST Rules for denial of input tax credit on account of contravention of sub-section (4) of section 16 of the said Act, but no demand notice/statement under section 73 or section 74 of the said Act has been issued.
3.2 Where demand notice/ statement under section 73 or section 74 of CGST Act has been issued but no order under section 73 or section 74 of CGST Act has been issued by the Adjudicating Authority:
In such cases, the Adjudicating Authority shall take cognizance of sub-section (5) or sub section (6) of section 16 of the CGST Act, inserted retrospectively with effect from 01.07.2017, and pass appropriate order under section 73 or section 74 of the CGST Act.
3.3 Where order under section 73 or section 74 of the CGST Act has been issued and appeal has been filed under section 107 of the CGST Act with the Appellate Authority but no order under section 107 of the CGST Act has been issued by the Appellate Authority:
In such cases, the Appellate Authority shall take cognizance of sub-section (5) or sub section (6) of section 16 of the CGST Act, inserted retrospectively with effect from 01.07.2017, and pass appropriate order under section 107 of the CGST Act.
3.4 Where order under section 73 or section 74 of the CGST Act has been issued and Revisional Authority has initiated proceedings under section 108 of the CGST Act, but no order under section 108 of the CGST Act has been issued by the Revisional Authority:
In such cases, the Revisional Authority shall take cognizance of sub-section (5) or sub section (6) of section 16 of the CGST Act, inserted retrospectively with effect from 01.07.2017, and pass appropriate order under section 108 of the CGST Act.
3.5 Where order under section 73 or section 74 of the CGST Act has been issued but no appeal against the said order has been filed with the Appellate Authority, or where the order under section 107 or section 108 of the CGST Act has been issued by the Appellate Authority or the Revisional Authority but no appeal against the said order has been filed with the Appellate Tribunal:
In such cases, where any order under section 73 or section 74 or section 107 or section 108 of the CGST Act has been issued confirming demand for wrong availment of input tax credit on account of contravention of provisions of sub-section (4) of section 16 of the CGST Act, but where such input tax credit is now available as per the provisions of sub section (5) or sub-section (6) of section 16 of the CGST Act,
and where appeal against the said order has not been filed, the concerned taxpayer may apply for rectification of such order under the special procedure under section 148 of the CGST Act notified vide Notification No. 22/2024 – Central tax dated 08.10.2024, within a period of six months from the date of issuance of the said notification.
3.5.1 The taxpayers can file an application for rectification electronically, after login to www.gst.gov.in, using their credentials, by navigating as below in various cases:
a. In case where an application for rectification of an order issued under section 73 or section 74 of the CGST Act is to be filed: i. Click Dashboard > Services > User Services > My Applications. ii. Select "Application for rectification of order" in the Application Type field, click the NEW APPLICATION button.
b. In case where an application for rectification of an order issued under section 107 of the CGST Act is to be filed:
i. Click Dashboard > Services > User Services > View Additional Notices/Orders
ii. Additional Notices and Orders page is displayed. Click the View hyperlink to go to the Case Details screen of the issued Notice/Order.
iii. Case Details page is displayed. The APPLICATIONS tab is selected by default. Select the ORDERS tab and click the "Initiate Rectification" link.
c. In case where an application for rectification of an order issued under section 108 of the CGST Act is to be filed:
i. Click Dashboard > Services > User Services > View Additional Notices/Orders
ii. Notices and Orders page is displayed. Click the View hyperlink to go to the Case Details screen of the issued Notice/Order.
iii. Case Details page is displayed. The NOTICES tab is selected by default. To submit Rectification Request against the Revision Order issued to you by the Revisional Authority, select the ORDERS tab and click the "Initiate Rectification" link.
3.5.2 While filing such application for rectification of order, the taxpayer shall upload along with the application for rectification of order, the information in the proforma in Annexure A of the said notification, containing inter-alia the details of the demand confirmed in the said order of the input tax credit wrongly availed on account of contravention of sub-section (4) of section 16 of the CGST Act, which is now eligible as per sub-section (5) and/or sub-section (6) of section 16 of the CGST Act.
3.5.3 Such application for rectification shall be dealt by the proper officer who had passed the order for which the said rectification application has been filed. The said officer shall take a decision on the said application for rectification and issue the order, as far as possible, within a period of three months from the date of such application.
Besides, in case where any rectification is being made by the proper officer in the order for which the rectification application has been filed, he shall also upload a summary of the rectified order electronically in FORM DRC-08 in cases where rectification of an order issued under section 73 or section 74 of the CGST Act is being made, and in FORM GST APL-04,
in cases where rectification of an order issued under section 107 or section 108 of the said Act is being made. While taking a decision on such application for rectification filed under the said special procedure, the proper officer shall also consider other grounds, if any, for denial of input tax credit, other than contravention of sub-section (4) of section 16 of the CGST Act, invoked in the concerned notice issued under section 73 or section 74, as applicable, in respect of the said amount of input tax credit.
3.5.4 Where the rectification adversely affects the said person, the principles of natural justice shall be followed by the said proper officer.
3.5.5 Further, it is to be noted that in cases where any rectification has been made by the proper officer in the order for which the rectification application has been filed, an appeal against such rectified order can be filed under the provisions of section 107 or section 112 of the CGST Act, as the case may be, within the time limit specified therein.
4. It is pertinent to note that in terms of section 150 of the Finance (No. 2) Act, 2024, no refund of tax already paid or input tax credit already reversed would be available, where such tax has been paid or input tax credit has been reversed on account of contravention of provisions of sub-section (4) of section 16 of the CGST Act, and where such input tax credit is now available as per the provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act.
5. It is to be noted that the rectification application of an order issued under section 73 or section 74 or section 107 or section 108 of the CGST Act, can be filed under the special procedure notified vide notification No. 22/2024 – Central tax dated 08.10.2024, within a period of six months from the date of issuance of the said notification,
only in cases where the issue or one of the issues on which the demand has been confirmed in the said order, pertains to wrong availment of input tax credit on account of contravention of provisions of sub-section (4) of section 16 of the CGST Act, and where such input tax credit is now available as per the provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act.
In cases where no such issue is involved and a taxpayer requires to file an application of rectification of an order, such rectification application can be filed by the taxpayers only under the provisions of section 161 of the CGST Act, within the time limit specified therein.
In case a taxpayer has filed an application for rectification of an order under the special procedure notified vide notification No. 22/2024 – Central tax dated 08.10.2024, but where it is found that the issues in the said order do not involve any issue of wrong availment of input tax credit on account of contravention of provisions of sub-section (4) of section 16 of the CGST Act, and where such input tax credit is now available as per the provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act, such an application would be summarily rejected by the proper officer with a remark that,
“The rectification application is rejected as it is found that the same is not covered under the notification No. 22/2024 – Central tax dated 08.10.2024, as no such issue is involved in the said order pertaining to wrong availment of input tax credit on account of contravention of provisions of sub-section (4) of section 16 of the CGST Act, and where such input tax credit is now available as per the provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act”.
6. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
7. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the Board. Hindi version would follow.
Sanjay Mangal Principal Commissioner (GST)
📚 Frequently Asked Questions (FAQs)
Q1: What is Circular No. 237/31/2024-GST about?
Answer: This CBIC circular provides clarification on the retrospective implementation of subsections (5) and (6) of Section 16 of the CGST Act. These amendments, introduced via Finance (No. 2) Act, 2024, allow input tax credit (ITC) to be claimed for FY 2017-18 to 2020-21 and in specific cases of registration revocation. 🧾 Stay compliant with evolving GST norms—consult Finodha’s experts at www.Finodha.in. —
Q2: What do subsections (5) and (6) of Section 16 specify?
Answer: Section 16(5) allows ITC on invoices for FY 2017-18 to 2020-21 if claimed in returns filed up to 30 Nov 2021. Section 16(6) enables ITC post-revocation of cancelled GST registration, if claimed within prescribed timelines. 👉 Learn more about eligibility: https://finodha.in/gst-compliance/ —
Q3: Who can benefit from these retrospective provisions?
Answer: Businesses who earlier lost ITC under Section 16(4) due to time-bar issues can now claim it under the extended timelines in 16(5) & 16(6), provided they meet the criteria and file necessary rectifications. 📌 For tailored eligibility checks, consult: https://finodha.in/online-gst-registration/ —
Q4: Can past orders under Sections 73, 74, 107, or 108 be rectified?
Answer: Yes. If no appeal has been filed against such orders, taxpayers can apply for rectification under Notification No. 22/2024 dated 08.10.2024 within 6 months. 💼 File rectifications online: https://finodha.in/gst-return-filing/ —
Q5: How can I apply for rectification under Notification No. 22/2024?
Answer: Login to the GST portal → Navigate to Dashboard > Services > User Services > My Applications → Choose "Application for rectification of order" → Fill details as per Annexure A and submit within 6 months of notification. 💡 Need help preparing documentation? Finodha assists with error-free GST workflows. —
Q6: What if an order has been passed but no appeal was filed?
Answer: If the confirmed demand in the order was based on denial of ITC under Section 16(4), and such credit is now available under 16(5) or 16(6), rectification can be requested as per the special procedure (Notification 22/2024). 🧩 For strategic advisory and appeal support, reach out at https://finodha.in/private-limited-company/ —
Q7: Are there limits or exclusions under this circular?
Answer: Yes. No refund of tax paid or ITC reversed shall be granted for transactions now falling under the benefit of Section 16(5) or 16(6), as per Section 150 of Finance (No. 2) Act, 2024. Also, rectification is allowed only for issues involving ITC denial under Section 16(4). ✳️ Consult Finodha to avoid misfiling and ensure proper claim scope. —
Q8: What are common scenarios addressed under this circular?
Answer: ✔️ No demand notice yet issued – officer should consider retrospective law ✔️ Demand notice issued, no order – adjudicator must consider revised provision ✔️ Order passed, appeal filed – appellate authority to apply revised law ✔️ Rectification under special procedure – if no appeal filed, but eligibility now allowed 🛡️ Finodha provides tailored strategy for each case: https://finodha.in/roc-compliance-for-private-limited-company/ —
Q9: Can the rectified order be appealed further?
Answer: Yes, if rectification adversely impacts the taxpayer, appeals under Section 107 or 112 of the CGST Act can be filed within the applicable limitation period. 📅 Need help tracking deadlines? Finodha offers compliance dashboards and alerts. —
Q10: What’s the deadline to file rectification applications?
Answer: As per the circular, applications under the special procedure must be filed within 6 months from the date of Notification 22/2024 (i.e., by 7 April 2025). ⏳ Don’t wait. Finodha helps file within time: https://finodha.in/setup-business/ —
✅ Final Summary:
Circular No. 237/31/2024-GST clarifies key procedural aspects of claiming ITC that was earlier ineligible due to time-bar restrictions under Section 16(4). The retrospective amendments offer significant relief, but must be availed through proper rectification and timelines under Notification 22/2024.
💼 Need to analyze your case or file a rectification? Trust Finodha’s expert GST professionals.
Important Keywords: Circular No. 236/30/2024-GST, GST as is where is basis, GST tax regularization, GST Council clarification, GST differential refund, Finodha GST support,
Words: 1817; Read time: 10 minutes
Table of Contents
Circular No. 236/30/2024-GST F. No. CBIC-190354/149/2024-TO(TRU-II)-CBEC Government of India Ministry of Finance Department of Revenue (Tax Research Unit)
North Block, New Delhi Dated the 11th October 2024
Circular No. 236/30/2024 - GST: Clarification regarding the scope of “as is / as is, where is basis” mentioned in the GST Circulars issued on the basis of recommendation of the GST Council in its meetings
To,
The Principal Chief Commissioners/ Principal Directors General, The Chief Commissioners/ Directors General, The Principal Commissioners/ Commissioners of Central Excise & Central Tax
Subject : Clarification regarding the scope of “as is / as is, where is basis” mentioned in the GST Circulars issued on the basis of recommendation of the GST Council in its meetings
Instances were brought to the notice of the Board pertaining to the prevailing doubts among the field formations/trade as regards the scope of regularization on “as is” or “as is, where is basis” vide various GST Circulars issued for clarification regarding applicable GST rates and appropriate classification of specified goods or service or both on the basis of recommendation of the GST Council in its various meetings.
2. The GST Council in its 54th Meeting held on 9th September 2024 has recommended issuance of clarification to clarify the intent behind the regularization done in the past meetings. Therefore, this Circular is being issued in exercise of power under Section 168 of CGSTAct 2017 to clarify scope of “as is” or “ as is, where is basis”.
3. Circulars have been issued based on recommendation of the GST Council wherein GST non-payment/ short-payments for past period have been regularized “As is” or As is, where is basis” in certain cases for supply of goods or services or both. Regularization for the past period has been done, on the recommendations of the Council, in situations,
such as, where genuine doubts have arisen as there are two competing entries with different rates in the notifications or issues have arisen due to diverse interpretation resulting in a situation where some suppliers have paid a lower rate of GST (including nil rate on account of an exemption entry) and some suppliers have paid a higher rate of GST. It has also been clarified that where taxpayers had paid at the higher GST rate, in such situations they shall not be entitled to any refund.
4. The phrase 'as is where is’ is generally used in the context of transfer of property and means that the property is being transferred in its current condition, whatever this condition happens to be and the transferee of property has accepted it with all its faults and defects, whether or not immediately apparent. In the context of GST, the phrase ‘regularized on as is where is’ basis means that the payment made at lower rate or exemption claimed by the taxpayer shall be accepted and no refund shall be made if tax has been paid at the higher rate.
The intention of the Council is to regularize payment at a lower rate including nil rate due to the tax position taken by taxable person, as full discharge of tax liability. The tax position of a taxable person is reflected in the returns filed by the person where the applicable rate of tax (or relevant exemption entry) on a transaction/supply is declared.
5. Thus, in cases where the matters have been regularized on “as is” or “ as is, where is basis”, in case of two competing rates and the GST is paid at lower of the two rates, or at nil rate where one of the competing rates was nil under notification entry, by some suppliers while other suppliers have paid at higher rate, payment at lower rate shall be treated as tax fully paid for the period that is regularized.
Illustration 1: In a situation where certain tax payers have paid 5% GST on supply of “X”, while some have paid 12% and the GST Council recommends to reduce the rate to 5% prospectively and regularize the past on “as is where is basis” which is notified on 1.12.2023,
this means that for the period prior to 1.12.2023, the 5% GST paid by tax payer will be treated as tax fully paid and they would not be required to pay duty differential of 7% between 5% and 12%. For those tax payers who have paid 12% GST, no refund would be allowed.
Illustration 2: In a situation where certain tax payers have paid 5% GST on supply of “X” while some have paid nil duty due to the genuine doubt that there was an exemption entry for “X”, and the GST Council recommends to clarify that the applicable rate is 5% and to regularize the past on “as is where is basis”, in view of prevailing genuine doubts, which is notified on 1.12.2023,
this means that for the period prior to 1.12.2023, nonpayment of GST and declaring such transactions as exempted supply in their return by the tax payer will be treated as full discharge of tax liability and they would not be required to pay duty differential of 5 % between Nil and 5%. For those tax payers who have paid 5%, no refund would be made.
Illustration 3: In a situation where the interpretational issue is between 5% and 12% rates and some taxpayers have paid 5 % , others have paid 12% while certain tax payers have not paid GST on supply of “X”, and the GST Council recommends to clarify that the applicable rate is 12% and regularize the past on “as is where is basis” which is notified on 1.12.2023, this means that for the period prior to 1.12.2023, the 5% GST paid by tax payer will be treated as tax fully paid and they would not be required to pay duty differential between 5% and 12% .
For those tax payers who have paid 12%, no refund would be made. However, the regularization would not apply to situations where no tax has been paid. In such cases, the applicable tax i.e. 12% shall be recovered.
6. Accordingly, suitable instructions shall be passed on to the field formations under your charge.
7. Difficulty, if any, in the implementation of this circular may be brought to the notice of the Board.
Answer: This circular, issued by CBIC on October 11, 2024, clarifies the scope of the term “as is / as is, where is basis” in the context of past GST circulars that regularized GST disputes related to applicable rates or classification differences. It provides guidance to field officers for consistent application of the GST Council’s decisions. —
Q2: What does “as is / as is, where is basis” mean in GST terms?
Answer: 📌 It means that where taxpayers paid lower GST rates (or nil due to exemption claims) based on genuine doubts or competing classifications, such payments will be treated as full discharge of liability. However, those who paid higher rates will not be entitled to any refund. —
Q3: In what cases has “as is where is” regularization been applied?
Answer: 🔍 The CBIC applies this in cases where: There are competing GST rate entries Suppliers differ in applying GST rates (some at 5%, some at 12%) Some declare supplies as exempt The Council regularizes lower ratepayers but denies refunds to those who paid more. —
Q4: What happens if GST was paid at a lower rate but not at all?
Answer: ✅ If some GST was paid (even at a lower rate), it’s accepted as full payment. 🚫 But if no GST was paid at all, and the Council clarifies that GST was applicable, the tax will be recovered from such taxpayers. —
Q5: Is a refund allowed if I paid the higher GST rate earlier?
Answer: ❌ No. Even if some taxpayers paid 12% GST while others paid 5%, no refund is available to those who paid higher amounts after “as is where is” regularization is announced. —
Q6: Can you explain with an example?
Answer: ✅ Sure. Let’s say: Some paid 5% GST on product “X” Others paid 12% due to doubt If the GST Council clarifies the correct rate as 5% and regularizes past payments “as is where is”, then: 5% payers need not pay more 12% of payers get no refund Non-payers must pay 5% with possible interest/penalty —
Q7: How does this impact GST returns?
Answer: 💼 Your GST return becomes a legal record of your tax position. If you declared a supply as exempt or used a lower rate and it’s later regularized, your filing stands accepted without retroactive demand. —
Q8: What if I wrongly declared nil tax but was liable at 12%?
Answer: ⚠️ If you paid no GST and the applicable rate is later confirmed as 12%, you will have to pay the full amount along with interest, as the “as is” relief is not granted to cases of complete non-payment. —
Q9: How does Finodha assist with rate classification and past GST disputes?
Q10: Where can I access a full copy of the Circular?
Answer: 🧾 The circular is available on the CBIC official website or can be obtained with expert summary at Finodha’s resource center: https://www.finodha.in —
✅ Conclusion:
Circular No. 236/30/2024-GST settles doubts on GST liabilities for past periods involving classification disputes. It assures businesses that past lower-rate declarations will not invite penalties but bars refund claims for higher tax payments.
🛡️ Stay legally protected. Let Finodha help you evaluate your GST position and defend your returns under “as is” circulars.
