CBIC Circular No. 261/07/2026-GST clarifies Section 17(4) for Banks and NBFCs

Circular No. 261/07/2026-GST clarifies that Section 17(4) is not applicable to every registration of a banking or financial institution indiscriminately. It also establishes when the 50% method becomes mandatory across eligible registrations, limits the same-PAN relaxation to suppliers who have opted for Section 17(4), prescribes ITC reporting and reversal procedures, and advises against adverse action for differing past reporting methodologies where the ITC availed is consistent with the clarified principles.