CBIC Clarifies GST Input Tax Credit Rules for Banks, FIs and NBFCs Under Section 17(4):

The Central Board of Indirect Taxes and Customs (CBIC) has issued a clarification on the application of Section 17(4) of the Central Goods and Services Tax (CGST) Act, 2017, regarding the availment and reversal of input tax credit (ITC) by banks, financial institutions and non-banking financial companies (NBFCs).

The circular aims to ensure uniformity in the implementation of GST provisions and resolve differences in practices followed by taxpayers.

Followings are the issues clarified by the CBIC:

Issue no. 1: "Whether all registrations of a banking company or a financial institution including a non-banking financial company, even those which are not engaged in supplying services by way of accepting deposits, extending loans and advances, can opt or are required to opt to comply with the provisions of section 17(4) of CGST Act?"

Issue No 2: "Whether the provisions of the second proviso to section 17(4) of CGST Act applicable to the tax paid on supplies made by a registered person having same PAN as the banking company or a financial institution including a non-banking financial company, where such a registered person does not opt to comply with the provisions of section 17(4) of CGST Act?"

Issue No 3: "What is the correct manner for reporting of availment and reversal of input tax credit (ITC) in FORM GSTR-3B, to be followed by a banking company or financial institution including a nonbanking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances, which opts to comply with the provisions of section 17(4) of CGST Act? "

For complete information refer to the following circular: