ITC ON BUSINESS PROMOTION SCHEMES

[Deepak Garg]

SIR

ONE OF MY CLIENT DEALS IN TRADING OF TEA AND HE GIVES BUSINESS PROMOTION SCHEMES TO THE DEALERS / CUSTOMERS. MY QUESTION IS WHETHER HE IS ELIGIBLE FOR ITC ON SCHEME ITEMS SUCH AS LED, MOBILE SET AND OTHER ELECTRONICS ITEMS.

AI Summary

Input Tax Credit Eligibility on Promotional Items: Consideration Needed for Gifts vs. Sales Inclusions in Tea Trading A client involved in tea trading inquires about the eligibility for Input Tax Credit (ITC) on promotional items like electronics given to dealers/customers. Responses indicate that ITC is generally allowed for business promotion expenses, but not for items given as gifts or free of cost. If promotional items are provided free, ITC must be reversed. However, if promotional items are included in the product's price, ITC may be claimed, as they are not considered free. Each case should be evaluated individually based on specific transaction details.