Text
The text below is the section as served by the CBIC tax information portal on 17 September 2026, with the portal's own amendment footnote markers (shown as small numerals before a bracket) and its footnotes.[1] The Act as published in the Gazette of India is the legal source.
Section 21, verbatim (show)
Section 21
* Section 21. Manner of recovery of credit distributed in excess.-
Where the Input Service Distributor distributes the credit in contravention of the provisions contained in section 20 resulting in excess distribution of credit to one or more recipients of credit, the excess credit so distributed shall be recovered from such recipients along with interest, and the provisions of section 73 or section 74 1[or section 74A],as the case may be, shall, mutatis mutandis , apply for determination of amount to be recovered.
*Enforced w.e.f. 1st July, 2017.
1. Inserted by section 120 of The Finance Act (No. 2) Act, 2024 No. 15 of 2024 dated 16.08.2024.
Questions to answer on the file
Questions a reviewer answers from the engagement file, grouped by the part of the section they come from. They describe what the section asks; they do not decide it.
Scope the section as a whole and its footnote
Questions to answer on the file1 question
Distribution in contravention of section 20, resulting in excess the opening words
Questions to answer on the file4 questions
Recovery from the recipients of credit, with interest the recovery words
Questions to answer on the file2 questions
The provision applied for determination of the amount the mutatis mutandis words
Questions to answer on the file2 questions
Amendment history
The CBIC text carries 1 footnote. The table gives each in the source's own terms. Effective dates are as the footnotes state them.[1]
| Note | Change |
|---|---|
| 1 | Inserted by section 120 of The Finance Act (No. 2) Act, 2024 No. 15 of 2024 dated 16.08.2024.[2] |
Relationship with other provisions
| Provision | Connection | Words that tie them |
|---|---|---|
| Section 20 | this provision requires Section 20 | s.21 "distributes the credit in contravention of the provisions contained in section 20" |
| Section 73 | this provision branches on Section 73 | s.21 "the provisions of section 73... as the case may be, shall, mutatis mutandis, apply for determination of amount to be recovered" |
| Section 74 | this provision branches on Section 74 | s.21 "or section 74... as the case may be" |
| Section 74A | this provision branches on Section 74A | s.21 1["or section 74A"] |
| Rule 39 of the CGST Rules, 2017 | this provision prescribed by rule 39 of the CGST Rules 2017 | s.21 "in contravention of the provisions contained in section 20", which section 20 leaves to be prescribed |
Circulars and notifications
Circulars and notifications in the CBIC repository that cite this section, newest first, by number, date and subject. A listing here does not say what an instrument decides; read the instrument.
Circulars (1)
| Number | Date | Subject |
|---|---|---|
| Circular No. 71/45/2018-GST | 26 October 2018 | Clarification on issues pertaining to registration as a casual taxable person & recovery of excess Input Tax Credit distributed by an Input Service distributor |
Unsettled questions
The words of section 21 do not answer this question. Where one decides a matter on the file, the answer depends on the position taken on it.
- At what rate does the interest in section 21 run, and from what date? The section says the excess credit is recovered "along with interest" and nowhere names a rate, a starting date or the provision that supplies either; it applies sections 73, 74 and 74A to the determination of the amount, and not to the interest.
See also
- Section 20 of the CGST Act, 2017: manner of distribution of credit by Input Service Distributor
- Section 73 of the CGST Act, 2017: determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts
- Section 74 of the CGST Act, 2017: determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any willful-misstatement or suppression of facts
- Section 74A of the CGST Act, 2017: determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to Financial Year 2024-25 onward
References
- Central Board of Indirect Taxes and Customs. "Section 21. Manner of recovery of credit distributed in excess". Central Goods and Services Tax Act, 2017, CBIC tax information portal, with amendment footnotes 1 to 1. Retrieved 17 September 2026.
- The Finance Act (No. 2) Act, 2024. Cited in CBIC footnote 1.
External links
- CGST Act, 2017, Section 21 on the CBIC tax information portal