17(5)(g) Disallowance

[Niilesh Zaveri]

If expenditure is incurred on the stay and food of the employee of the Customer of the registered person, can the ITC refund be disallowed when the entity is exclusively engaged in export of services?

Need Case Law to support the view

[Amit Agrawal]

Restrictions - in availing ITC - u/s 17 (5) are applicable even if such inward supply is used for exporting goods / services.

W.r.t. subject-line of your query, if expenses incurred for employees's stay while on business tour (i.e. Hotel accommodation), such expenses are not for personal consumption and you are eligible to avail ITC there-against.

W.r.t. if expenses incurred for employees's foods either on business tour or otherwise, restrictions u/s 17 (5) (b) will apply and you are not eligible to avail ITC there-against unless it is obligatory for an employer to provide the same to its employees under any law for the time being in force.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

And to add to last post:

W.r.t. subject-line of your query, if expenses incurred for employees's regular-home (i.e. renting of residential dwelling services), matter about ITC is not free from doubt and same is expected to be controversial under GST. To see how such risks / controversy can be avoided, you may refer to my posts under Issue ID - 118044 bearing subject line 'GST on rent of employee paid by employer'.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Ganeshan Kalyani]

First the credit should be eligible and then it can be considered for refund.

AI Summary

Input tax credit restrictions: hotel accommodation for business travel claimable, food expenses and residential rent largely disallowed. GST ITC under Section 17(5) treats hotel accommodation for an employee on business travel as eligible ITC, while employee food expenses are generally ineligible under Section 17(5)(b) unless mandated by law. Rent of residential dwelling paid for employees is legally uncertain and controversial. Any refund claim requires that the credit be eligible as ITC first.