Accumulated ITC when ECO collects taxes under 9(5)

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This discussion clarifies the implications of Section 9(5) of the GST law, where e-commerce operators (ECOs) collect taxes. It specifically addresses the issue of accumulated Input Tax Credit (ITC) for travel agents and restaurants whose suppliers are liable for tax collection by the ECO. The core problem is that suppliers may have unutilised ITC with no corresponding outward taxable supply to set it off against, particularly when the ECO handles the tax payment.

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(Querist)
02 February 2022 What about the ITC accumulated in case of travel agents providing through e commerce operator where ECO are liable to pay tax from 01.01.2022 but ITC is accumulated in suppliers account. They don't have any outward supply against which ITC can be set off
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Lekhraj sood

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Lekhraj sood (Expert)
02 February 2022 This change is applicable only for resraurant service like Zomatto,swiggy etc. and not for other services provided through ECO.
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CA Reema Sonigra Mehta

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CA Reema Sonigra Mehta (Querist)
02 February 2022 Yes but the same applies to Restaurants as suppliers too. Also the change has been incorporated to included motor vehicle
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CA Altamush Zafar

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CA Altamush Zafar (Expert)
02 February 2022 Since you have no outward taxable liabilities then how can claim ITC?
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