ITC of Canteen Exp.(Food & beverages) _in Factory

[Prem Choudhary]

Dear Expert

As per amendment in Section 17(5)(b) CGST Act, 2017 as amended by the CGST (Amendment) Act, 2018 w.e.f 1^st February, 2019, allows input tax credit in respect of such goods or services or both, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.

The canteen is obligatory in Factories Act 1948 therefore We can take Credit of Canteen bills of food and beverages exp.

1. if Canteen is given on contract then Credit of contractor bills can take credit

2. if maintained by Company self ,then ITC on material consumed in canteen can be take credit

please advice if any contrary views.

AI Summary

Input tax credit for employer provided canteens allowed when legally obligatory; employee charges trigger restricted credit and reduced rate tax.
ITC for food and beverages supplied in factory canteens is allowed where the employer is legally obliged to provide them; if no recovery from employees occurs, ITC is claimable on contractor bills or self procured materials. Recovery from employees renders the outward supply taxable at a concessional rate without ITC entitlement and triggers proportionate reversal of ITC. Contractor registration status affects availability of ITC and chargeability of tax.