Special provisions in respect of Banks, FI and NBFC :
A banking company or a financial institution including a non-banking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances shall have the option to either comply with the provisions of section 17(2) of CGST Act, or avail of, every month, an amount equal to fifty per cent of the eligible input tax credit on inputs, capital goods and input services in that month – section 17(4) of CGST Act.
The option once exercised shall not be withdrawn during the remaining part of the financial year – first proviso to section 17(4) of CGST Act.
The 50% restriction shall not apply to the tax paid on supplies made by one registered person to another registered person having same PAN number – second proviso to section 17(4) of CGST Act.
This provision applies when Bank/FI/NBFC in one State provides services (or supplies goods) to its own branch in another State.
In most of the cases, Bank, FI or NBFC may find it easy and profitable to avail 50% of input tax credit instead of availing input tax credit on proportionate basis as per section 17(2) of CGST Act.