Attention businesses! Amendments to Input Tax Credit (ITC) Rules under the CGST Act, 2017 have been implemented

The Central Government has made changes to Notification No. 11/2017- Central Tax (Rate).

➡️ These changes introduce conditions for taking ITC on input services in the same line of business.

➡️ ITC on such input services will be restricted to 2.5% when the supplier charges a higher tax rate.

➡️ The notification also omits certain entries.

➡️ These changes take effect on October 20, 2023.

What does this mean for businesses?

Businesses that receive input services in the same line of business from suppliers who charge a higher tax rate will need to take note of this change.

For example, a restaurant that receives catering services from a supplier who charges a 18% GST rate will only be able to claim ITC on 2.5% of the GST paid.

What should businesses do?

Businesses should review their input tax credit claims to ensure that they are in compliance with the new rules.

Businesses should also be aware of the omitted entries in the notification.