The circular provides clarification on the input tax credit (ITC) treatment for electronic commerce operators (ECOs) who are required to pay tax under Section 9(5) of the Central Goods and Services Tax (CGST) Act, specifically for services other than restaurant services. It reaffirms a previous clarification that ECOs are not required to reverse the ITC on inputs and input services used for providing services such as restaurant services, on which they pay tax under Section 9(5). This applies to other specified services as well.

The circular also clarifies that ECOs need to pay the full tax liability for supplies under Section 9(5) using their electronic cash ledger. The ITC they have availed on inputs and input services cannot be used to pay this tax liability. However, the ITC can be used for paying taxes on the ECO’s own services, such as platform fees or commissions. This ensures that the process for handling ITC remains consistent for all services covered under Section 9(5) of the CGST Act.