Blocked Credit Sec 17 (5)

[V Rajalakshmi]

Company has organised a customer meeting to discuss about the various new scheme proposing to be introduced by the company. The company has incurred the following expenditure

1.hall rent 2. Food 3. Gift voucher

Query is whether the company can claim ITC on food expenses. What is the impact if the company has received a consolidated bill from supplier with out any break up of amount but duly mentioning the nature of service alone in the invoice.

[Amit Agrawal]

ITC against 'food and beverages, outdoor catering' etc. is specifically blocked u/s 17(5)(b)(i) (i.e. unless where it is obligatory for an employer to provide the same to its employees under any law for the time being in force).

Hence, ITC against food in given situation is not allowed, though one can claim ITC against hall-rent.

W.r.t. second situation about consolidated bill, what is the nature of services rendered (along-with HSN code) & tax-rate mentioned on the invoice for the consolidated amount?

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

[Shilpi Jain]

The assessment of the nature of service done at the supplier's end cannot be questioned at the recipient's end.

So knowing the HSN and classification adopted by the supplier would be relevant to answer the eligibility of credit.

As stated by Amitji, in case it is classified as supply of F&B / outdoor catering, credit will be blocked.

AI Summary

Can a Company Claim Input Tax Credit on Food Expenses with Consolidated Bills? Insights on Section 17(5)(b)(i). A company organized a customer meeting and incurred expenses for hall rent, food, and gift vouchers. The query concerns whether the company can claim Input Tax Credit (ITC) on food expenses, especially when receiving a consolidated bill without a detailed breakdown. Amit Agrawal explained that ITC for food and beverages is blocked under Section 17(5)(b)(i) unless required by law for employees, but ITC can be claimed for hall rent. Shilpi Jain emphasized the importance of knowing the HSN code and classification by the supplier, as credit is blocked for food and beverage services.