Manner of recovery of credit distributed in excess
Section 21, CGST Act
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If an Input Service Distributor distributes credit in excess of, or contrary to, section 20, that excess is recovered from the recipients with interest, using the demand machinery of sections 73/74 (and, from FY2024-25, section 74A).
What this means in practice
The parts that actually decide cases — the things a practitioner checks first.
Recovery is from the RECIPIENT of the excess credit, not from the ISD, and it carries interest.
For periods up to FY 2023-24 the demand runs under section 73 or 74; from FY 2024-25 the single section is 74A.
Questions people actually ask
Real questions we get on this provision, answered straight.
The ISD distributed more credit to one unit than it should have. Who pays it back?+
The unit that received the excess credit, with interest, through a demand under section 73 or 74 for periods up to FY 2023-24 and under section 74A from FY 2024-25.
The exact words of the law
533 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
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High Court cases on this section
Judgments in our index that cite this provision. Being listed does not make a case good law — it may have been appealed or distinguished since. Read it before relying on it.
AMIRUL ISLAM SAYED v. PRINCIPAL COMMISSIONER OF GOODS AND SERVICE TAX
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HASHMI OVERSEAS LLP THROUGH ITS PARTNER AMIRUL ISLAM SAYED THROUGH ITS POA MOHAMMAD MOIN PATHAN v. PRINCIPAL COMMISSIONER OF GOODS
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M/S. KSM COMPANY v. STATE TAX OFFICER (1), MOBILE SQUAD, (ENFORCEMENT)
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M/S. KSM COMPANY v. STATE TAX OFFICER (3), MOBILE SQUAD-3, ENFORCEMENT 7
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RIHANA W/O FAKRU v. COMMISSIONER OF GOODS AND SERVICE TAX
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SALALUDDIN S/O BADLU v. COMMISSIONER OF GOODS AND SERVICE TAX CENTRAL GST AND CENTRAL EXCISE VADODARA II
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SILVER RUSH EXIM v. STATE TAX OFFICER
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M/S SHREEJI STEEL v. STATE TAX OFFICER (1), KUTCH MOBILE SQUAD
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33 more on record. Search all GST case law →
What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
date not stated · Inserted
Inserted by section 120 of The Finance Act (No. 2) Act, 2024 No. 15 of 2024 dated 16.08.2024.
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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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