Banking-sector ITC apportionment under section 17(4) requires a uniform credit election across all eligible registrations
Circulars
GST
Section 17(4) permits the fifty-percent eligible input tax credit method only for registrations of banking companies, financial institutions and NBFCs that supply deposit, loan or advance services; registrations not providing those services cannot elect or must not follow that method. Once an eligible registration elects it, all eligible registrations of that entity must comply. The second-proviso relaxation applies only to supplies received from same-PAN registrants that have also elected section 17(4). GSTR-3B reporting requires permanent reversal of non-business, blocked and the remaining ineligible credit, with temporary reversal and later reclaim of credit where section 16 conditions are subsequently met. Under IMS, presently ineligible invoices must be kept pending. Earlier reporting practices should not attract adverse action if the resulting credit conforms to these principles.
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