GST ITC on spondorship

[Madhavan iyengar]

In case of sponsorship fees paid by a manufacturing company to an agency for purpose of sponsor of event related to employee national awards for the rcm paid on sponsorship can credit of rcm be availed by company as eligible credit under gst

[KASTURI SETHI]

In my view, this activity conforms to the condition of ITC using in the course of business or furtherance of business.Hence ITC is allowed under RCM.

[Ganeshan Kalyani]

Yes, the credit is eligible.

[DR.MARIAPPAN GOVINDARAJAN]

If the sponsorship services is for the furtherance of business ITC is eligible.

[Madhavan iyengar]

sir event is a general event where all employers sponsor the event by making a contribution in this context can it be said to be in the course or furtherance of business

[KASTURI SETHI]

Sponsoring any event always boosts the business. National award event is not a small event. National award always boosts moral of the employee (awardee). Other employees will also get motivated. The phrase, "in the course of business or furtherance of business" has wider scope. It has not limited scope. There are case laws on the issue which prove that sponsoring event boosts the business. If an employee of any company gets national award that company comes into limelight.

[Madhavan iyengar]

Kasturiji- thanks a lot now it is very clear and very well explained by you which will help us in contending the eligibility for credit as hopefully under gst regime the credit should be litigation free.

AI Summary

ITC eligibility for sponsorship under reverse charge hinges on whether the sponsorship furthers business, enabling credit. ITC on sponsorship fees charged under reverse charge is allowable where the sponsorship is for the furtherance of business; sponsoring public events that promote the company's profile or motivate employees falls within 'in the course of business or furtherance of business,' so credit may be claimed subject to the normal documentary and compliance conditions for input tax credit.