ITC of CSR Expenses

[Prem Choudhary]

Dear Expert

Please advice, whether CSR Expenses are eligible for credit under GST.

we are aware that this is not furtherance of business expenses but it is provided in other Laws.

[KASTURI SETHI]

Dear Querist,

On what basis you can jump to conclusion that CSR is not in furtherance of business ? What is logic behind your view ? CSR (Corporate Social Responsibility) expenses are covered under Section 2 (17) (b) of CGST Act, 2017 which extracted below :-

Section 2 (17) “business” includes -

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;

(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);

Relevant clauses have been highlighted. CSR expenses are eligible for ITC under GST.

. On 5.9.18, Mumbai Bench of CESTAT has held that CSR activities are linked to business and eligible for cenvat credit as input service. Although the above decision of CESTAT Mumbai pertains to the pre-GST period yet it is applicable to post-GST regime.

However, there is another case law which is appended below:

2018 (362) E.L.T. 833 (Tri. - Mumbai) = 2018 (9) TMI 247 - CESTAT MUMBAI ESSEL PROPACK LTD. Versus COMMISSIONER OF CGST, BHIWANDI

In view of the above two case laws (though pertaining to pre-GST era), I am of the view that CSR expenses are eligible for ITC under the present GST regime.

 

[CSSANJAY MALHOTRA]

Am in agreement with Sh. Kasturi ji that ITC is available on CSR activities. Govt clarified vide FAQ also.

Please do note that if you avail iTC then you have to incur additional expense on CSR. Hence advisable not to avail ITC to save on additional outflow. Check from Income Tax side, May be these expenses are disallowed.

[Prem Choudhary]

Dear Sanjay ji

Thank you for your valuable advice, can you share the FAQ ...

AI Summary

Debate on CSR Expenses as Input Tax Credit under GST; Insights on Section 2(17)(b) and Potential Tax Implications. A discussion on a forum addressed whether Corporate Social Responsibility (CSR) expenses are eligible for Input Tax Credit (ITC) under the Goods and Services Tax (GST). One expert argued that CSR expenses fall under the definition of business activities as per Section 2(17)(b) of the CGST Act, 2017, and cited a Mumbai CESTAT decision supporting this view. Another participant agreed, noting that the government clarified this in a FAQ, but advised caution as availing ITC may require additional CSR expenditure and could be disallowed under Income Tax laws.