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,
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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/
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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.).
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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.
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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/
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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).
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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.
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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.
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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).
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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.
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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/
Download PDF: Circular 240/34/2024 – GST
More Information: https://taxinformation.cbic.gov.in/
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