GST implication on transfer of IT asset from corporate location (GST registered) to sales person located in different states (non registered under GST)

[Rohit Pandya]

Hi team, I am procuring IT assets like laptop, mobile device at a central location (i.e. corporate office - registered under GST) and then transferring these IT assets to our sales persons (Employee) located in different states which is not registered under GST. Is it necessary to pay GST while transferring these IT assets vide courier along with B2CS supply invoice.

Will the answer to above question change if we are recipient sales person is located in a GST registered state (ISD registration/regular registration).

In scenario 1, my GST ITC will be cost if I pay in the registered state and raise invoice as B2CS supply.

In scenario 2, my GST ITC will be cost if I pay in the registered state and raise invoice to a ISD registered premises. I will be able to avail ITC only in case of transfer of IT assets within 2 regular registrations of the same entity.

Please clarify this doubt. Thanks in advance for your comments.

[GUNASEKARAN K]

1. If laptops and mobiles are given to employees for use in the course or furtherance of business, and tax invoice of the said goods are received by the company with its "Name & GSTIN", the Company can claim the ITC paid on such inputs while paying GST on outward supplies of company. However, if the company is treating them as capital goods and claiming depreciation even on the GST portion by capitalizing the tax amount, no ITC shall be available in that case.

2. Services by an employee to an employer in the course of employment are outside the scope of GST. Any supply by the employer to the employee in terms of a contractual agreement between the employer and the employee will not be subject to GST.

[Amit Agrawal]

There are multiple facets of tax-compliance strategy involved in the raised query, where every factual aspects of the business to be considered before answering the issues like subject queries.

In other words, it would be risky to answer the queries without knowing multiple factual aspects of that particular business and tax-compliance strategy structured to minimise areas of disputes with Dept. as well as to minimise potential losses of ITC (if any) and to maximum maximum efficiency through tax-planning.

Broadly specking, following facets needs to be looked into:

A. Whether said tax-payer have 'fixed establishment' in other states / UT where employees are stationed? And yes, regular registration in other states / UT becomes compulsory.

B. If said tax-payer do NOT have 'fixed establishment' in other states / UT where employees are stationed & there is no need to take regular registration in other states / UT, whether 'casual registration' - which is compulsory - comes into picture?

C. And Co. has indeed taken / will be taking regular registration (or, casual registration) in other states / UT, what type of services are provided from these registrations to its HO / manufacturing location etc. (For example: Marketing & Support) OR any outward supply to third party gets created (if any) and how any of these outward supply and liability thereof can be structured. And there is any 'additional' loss of ITC involved due to any of planned business structuring - for a Co. as a whole? Depending upon answer to these questions (i.e. tax compliance strategy taken for Co. as a whole), answer to the query raised by you should be looked into.

D. If said tax-payer do NOT have 'fixed establishment' in other states / UT where employees are stationed & there is no need to take regular registration in other states / UT as well as 'casual registration' is also not applicable, then, answer to the query raised by you may be materially different than the situation where these registrations become compulsory.

E. Many facets relating to use of ISD mechanism (even when compulsory) is also inter-linked with entire tax compliance strategy and cannot / should not be looked into isolation.

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

[Shilpi Jain]

Assuming there is no requirement to take any normal registration in the other States, mere sending of assets to the employees should not amount to supply as there is no supply since there are no 2 distinct person involved.

In such case no requirement to issue any invoice and pay any GST.

Also please note that ITC of goods cannot be distributed by way of ISD.

Though I agree with Amitji that there are different facets of this query that need to be analysed and concluded w.r.t. the query raised. Suggest that you consult a professional in this regard.

[Ganeshan Kalyani]

The supplier of laptop may be asked to do bill to ship to . Bill to your HO and ship to your employee at other state. ITC is allowed in such case as per Sec. 16(2)(b)(i) reproduced below.

where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;

[Padmanathan KV]

I agree with Ld. Amit Ji and Shilpi Ma'am. The answer to your query hinges on the requirement of registration in other states which is again based on nature of activity done there. This will require more detailed analysis

AI Summary

Transferring IT Assets to Non-Registered Sales Staff: GST Implications and Input Tax Credit Eligibility Under Review A corporate entity inquires about the GST implications of transferring IT assets from a GST-registered corporate office to sales employees in different states, where these employees are not GST-registered. Responses highlight that if IT assets are provided for business use and the company receives a tax invoice, it may claim input tax credit (ITC). The discussion also considers whether the company has a fixed establishment in other states, which could necessitate GST registration. If no registration is required, transferring assets might not be considered a supply, thus not attracting GST. The complexity of the situation suggests consulting a professional for tailored advice.