Input tax credit

[neela kandan]

My friend is a MD of IT company.He wants to know whether he can avail ITC for the telephone bills paid

regards

[Himansu Sekhar]

Telephone bills in the name of the company allowed.

[Himansu Sekhar]

If the bills are in his own name or the telephones are used in his residence even if in the name of the company the credit is not allowed refer sec 17(5) of cgst act

[Ganeshan Kalyani]

Credit is allowed if the input is used in course or furtherance of business. If telephone is used partially for business and partly for person use then credit is allowed of the input tax which is used for business purpose.

[Ganeshan Kalyani]

Telephone service is subject to litigation. It need to be justified that the purpose is for business use.

[DR.MARIAPPAN GOVINDARAJAN]

It the said services is utilized in the course or furtherance of business then it is allowed.

[Rajagopalan Ranganathan]

Sir,

According to Section 17 (5) (g) of CGST Act, 2017 In respect of goods or services or both used for personal consumption, input tax credit shall not be available.

According to Section 17 (1) of CGST Act, 2017 "where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business. "

[Himansu Sekhar]

I agree with the experts.

[KASTURI SETHI]

The reply of Sh.Ranganathan, Sir covers (includes) the replies of all experts. ITC is available but conditionally and has to be taken care of the phrase, "in the course of or for furtherance of business". In the Company's office telephone which is in the name of Director of the Company, ITC is admissible as telephone is being used in course of or for furtherance of business of the Company.

[Ganeshan Kalyani]

Telephone service may invite audit point. Say for e.g. a director is having telephone at home which is paid by the company. The telephone is also in the name of company. The director does business calls at home. He makes good business deal through that phone. But at the same time he is receiving or makes call to his relative. In this case how to bifurcate the expense. There is practical difficulties.

[KASTURI SETHI]

ITC is allowed even if phone is installed at home. Only it should be established that phone is used in the course or furtherance of business of the company registered under GST.

[Ganeshan Kalyani]

I agree with you Sir. But it is a fact that the process of establishing that the phone is used in course or furtherance of business is a challenging job.

[Himansu Sekhar]

It will be on case to case basis.

AI Summary

Eligibility for Input Tax Credit on Telephone Bills Under GST: Business Use Crucial, Refer to Section 17 CGST Act. An individual inquired about the eligibility of claiming Input Tax Credit (ITC) on telephone bills under the Goods and Services Tax (GST) framework. The consensus among respondents is that ITC is permissible if the telephone bills are in the company's name and used for business purposes. However, if the telephone is used partially for personal use, ITC is limited to the business-related portion. The discussion highlights the importance of justifying business use, referencing Section 17 of the CGST Act, which restricts ITC for personal consumption. Establishing business use can be challenging and may require case-by-case analysis.