The Central Board of Indirect Taxes & Customs (CBIC) on October 26, 2026, issued a circular regarding clarification on issues related to provisions of section 17(4) of the Central Goods and Services Tax Act, 2017.
The following has been stated: -
•The Central Board of Indirect Taxes and Customs (CBIC), under Section 168(1) of the Central Goods and Services Tax (CGST) Act, 2017, clarifies the applicability of the 50% input tax credit (ITC) option for banking companies, financial institutions and non-banking financial companies.
•The option applies only to registrations engaged in accepting deposits or extending loans and advances, and once opted for, it must be followed by all eligible registrations of the same entity.
•The circular clarifies the treatment of supplies received from persons having the same PAN and prescribes the procedure for availing and reversing ITC in Form GSTR-3B, including cases involving the Invoice Management System (IMS).
•Tax authorities are advised not to take an adverse view of different reporting methods adopted in past periods, provided the ITC availed is consistent with the prescribed principles.
[Circular No. 261/07/2026-GST]
