Claim of credit by a banking company or a financial institution
Rule 38 of the CGST Rules
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Amendment history
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A bank or financial institution that opts for the 50 per cent scheme under section 17(4) takes only half of the eligible credit each month; credit on inward supplies from a distinct person is not restricted, and the choice cannot be changed during the year.
The exact words of the law
1,156 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
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(2) of section 17 , in accordance with the option permitted under sub-section
(4) of that section, shall follow the following procedure, namely,-
(a) the said company or institution shall not avail the credit of,- ( i ) the tax paid on inputs and input services that are used for non-business purposes; and (ii) the credit attributable to the supplies specified in sub-section
(5) of section 17 1 [****] ;
(b) the said company or institution shall avail the credit of tax paid on inputs and input services referred to in the second proviso to sub-section
(4) of section 17 and not covered under clause (a );
(c) fifty per cent. of the remaining amount of input tax shall be the input tax credit admissible to the company or the institution 2 [and the balance amount of input tax credit shall be reversed in FORM GSTR-3B ] ;
(d) 3 [****]
What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
2022-10-01 · Omitted
19/2022-CTdated
Omitted (w.e.f. 01.10.2022) vide Notification No. 19/2022 – CT dated 28.09.2022.
2022-10-01 · Substituted
19/2022-CTdated
Substituted (w.e.f. 01.10.2022) vide Notification No. 19/2022 – CT dated 28.09.2022. 3. Omitted (w.e.f. 01.10.2022) vide Notification No. 19/2022 – CT dated 28.09.2022.
Where this comes from
Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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