ITC on business promotion and Diwali Gift to Employees.

[MODASSIR NAZAR]

Dear All

One of My company doing camera rental Business.They give mobile and gift to cameraman and their assistants as a business promotions.can i take ITC of GST on the same.

Also we are gifting in diwali to our employees. Can we take GST ITC on the same. (diwali gift to Employees).

[SHARAD ANADA]

Refer schedule I of CGST Act and Sec 17(5) of CGST Act.

SCHEDULE I ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION

[KASTURI SETHI]

After agreement with Sh.Sharad Anada Ji, I would like to add as under:-

Fundamental is very much clear for availing ITC. ITC cannot cannot be availed if supply of goods or services is fully exempted. Free gift is an exempted supply. In order to be eligible for availing ITC, one must fulfill the condition of using the same in taxable supply.

[KASTURI SETHI]

Proportionate reversal of ITC against free gift is requirement of law. This is in continuation of my reply dated 21.1.2019.

[Alkesh Jani]

Sir,

I agree with our Experts, just to add a little to Sh. Sharad Anandji’s reply, that as per the first part of the query, the value of gifts for furtherence of business, is liable to GST (Schedule-I Para 2) is applicable.

For second part of query, i.e. Diwali gift to employee, Proviso to Schedule-I Para 2 is applicable.

Thanks,

With regards,

[KASTURI SETHI]

Sh.Alkesh Jani Ji, You are right. Your role can be termed as "Match (issue) finisher" like M.S.Dhoni. Also being cool like him (Dhoni Cricketer). It has happened many times. It is a fact.

[Alkesh Jani]

Sh. Kasturiji Sir,

I thank you, as you have always been a very good guide for all. You word of appericiation really matters a lot to me as well all the visitors of this site.

Thanks again,

With regards,

[Ganeshan Kalyani]

Input tax credit on mobile, gift given to cameraman and its assistant as per section 17(5) of CGST Act.

AI Summary

Input tax credit on gifts: promotional giveaways may require reversal if treated as exempt or excluded supplies.
Gifts for business promotion may be treated as supply even without consideration and, if they constitute exempt or excluded supplies, ITC cannot be claimed and proportionate reversal of ITC is required; employee gifts are addressed by a specific proviso that limits credit for such distributions.