Section 21 – Manner of Recovery of Credit Distributed in Excess
Section 21 of CGST Act, 2017 – Manner of Recovery of Credit Distributed in Excess Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Bare Act Text – Section 21 Section 21: 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, the excess credit so distributed shall be recovered from such recipients along with interest, and the provisions of sections 73 or 74, as the case may be, shall apply for determination of such excess credit. 2. Objective of Section 21 Section 21 ensures that: Input Service Distributor (ISD) follows Section 20 strictly No excess or wrongful ITC is retained by recipient units Revenue loss due to incorrect distribution is recovered This section acts as a corrective and deterrent provision for ISD-related non-compliances. 3. When Does Section 21 Apply? Se...