sec 16 (1)

[giri gattupalli]

respected sir,

one of my clint purchased 10 lakh rupees gold and obtained tax invoice during fy 2020-21.and it was included in business assets in balance sheet. plese discuss whether this input supply qulified as in the course of business supply and eligible for taking input tax credit or not please discuss

thanking you

[Rajagopalan Ranganathan]

Sir,

if the nature of your client' business is supplying (selling) gold as such or use the same for manufacture of gold jewellary and supply/sell the same to customers then your client is eligible to avail ITC. Normally purchase of gold will be treated as for personal consumption. In that case ITC is not available. If it is used in the course or furtherance of business then ITC is available.

[YAGAY and SUN]

In addition to above reply, please also refer the AAR of Maharashtra in the matter of BIOSTADT INDIA LIMITED - 2019 (3) TMI 540 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA, in which it was held for distribution of Gold to customers, ITC on procurement of gold coins will not be available.

AI Summary

Input tax credit eligibility hinges on business use of gold; credit available only when used in taxable supplies.
Whether purchase of gold qualifies for input tax credit depends on its use in the business: if the business sells gold as such or the gold is used to manufacture jewellery for supply, credit is available; if acquired for personal consumption or distributed to customers (as held in an advance ruling), credit is not available.