This circular provides clarification on whether electronic commerce operators (ECOs), liable to pay tax under Section 9(5) of the CGST Act for specified services supplied through their platforms, are required to reverse proportionate input tax credit (ITC) on their inputs and input services.

It clarifies that ECOs make two types of supplies — (i) specified services notified under Section 9(5), for which they are liable to pay tax as deemed suppliers, and (ii) their own services such as platform or commission-based services. The Board has reaffirmed that ECOs are not required to reverse ITC proportionately under Sections 17(1) or 17(2) for supplies made under Section 9(5). However, the ITC availed on inputs and input services used for facilitating such supplies cannot be utilized for payment of tax liability under Section 9(5), which must be paid entirely in cash. The availed ITC may, however, be used for paying tax on the ECO’s own supplies.