ITC available on uniform purchased for emplyee

[Vivek anandhan]

Dear Expert

We are manufacturing concern . We are purchasing uniform to our employee duly paid GST.

Can we take ITC on uniform purchased for employee.

Regards

Vivekanandhan

[Mahadev R]

When it meant for business purpose, ITC would be eligible. No restriction in Section 17(5) of CGST Act as well

[KASTURI SETHI]

I agree with Sh.Mahadev R. It is in the course of business. Uniform conveys message in the business.

[DR.MARIAPPAN GOVINDARAJAN]

ITC allowed.

[Alkesh Jani]

Dear Experts,

Kindly extend your views, for the following question which have arise in my mind, with respect to query raised.

1. The Section 7(1)(a) clearly states that “…. to be made for a consideration…..” Uniform, is a goods, if supplied to employee, without consideration, will it fall within the ambit of term “Supply”.

2. If the said uniform (goods held) purchased by the company and the said goods held by the company is transferred to his employee, the Schedule-II Para 4 (b) …. or made available to any person for use…. is supply of service” and when no consideration is received from the employee and no invoices are raised by the company for such supply. Then can we say that the goods are supplied free of cost, do we need to reverse the ITC availed?

3. What shall be the heading or where it is to be posted in books of account.

The above query is just to enrich my knowledge.

Thanks,

With regards,

[KASTURI SETHI]

With reference to queries raised by Sh.Alkesh Jani Ji, query-wise my views are as under:-

1. Undoubtedly, uniform can be called a goods. In the present scenario, 'supply' does not come into picture. I am of the view that goods (uniforms ) purchased by the company have been used in the course of business. Uniform is used for official purpose. Two factors, namely, 'purchase' and 'usage' are involved. No free supply to the employee is involved.

2. Serial No.4 of Schedule II is titled as ,"Transfer of business asset" In my view, uniform is not a business asset. Hence Schedule-II (Serial No.4) is not applicable.

3. I have no knowledge about the treatment having no commerce background.

Views of other experts are welcome. Off the beat opinions always enrich our knowledge.

AI Summary

Input tax credit on employee uniforms is allowable when purchased and used in the course of business, subject to supply analysis. ITC on uniforms is allowable where uniforms are purchased and used in the course of business; Section 17(5) does not explicitly bar such credit. A raised concern is whether providing uniforms to employees without consideration constitutes a taxable supply under the supply definition and Schedule II (transfer or making available for use), potentially triggering ITC reversal; the prevailing view in the discussion treats uniforms as business-use items, not business assets, and regards Schedule II Para 4 as inapplicable so no reversal is required.