ITC ON OFFER FOR SALE OF SHARES

[SHARAD ANADA]

Promoters of the limited compay offers their shares for sale to the public. After offer for sale by the promoters authorised and paid up share capital of the company remains the same. No new fund is introduced in the company. The company have incurred expenses for such offer for sale of promoters scurities and availed ITC on the said expenses.Whether the company is eligible for ITC?

[Ganeshan Kalyani]

Yes, ITC is eligible for taking credit.

[DR.MARIAPPAN GOVINDARAJAN]

ITC is eligible in this case,

[Padmanathan KV]

Dear querist, kindly provide the nature of expenses incurred.

[SHARAD ANADA]

Natrue of expenses are Charged On listing of the shares , amount Charged On underwriting fees, Charged Or initia fees on signmg of the mandate etc. All such expenses are paid to consultant who charged GST on the said servies invoices. As per department offer for sale of share is securities transaction and securities are neither goods nor services hence as per Sec. 16(1) ITC is not eligible. Pl guide

[Padmanathan KV]

Though securities are neither goods nor service, the impugned services mentioned by you such as underwriting, listing of securities etc are not themselves 'securities' per se and are indeed services. Therefore, credit of input tax charged on supply of such services under section 16(1) since in it in the course or furtherance of business.

AI Summary

Input tax credit eligibility on GST for services in promoters' offer for sale hinges on classifying underwriting and listing as taxable services.
Whether input tax credit is available on GST charged for services incurred in an offer for sale of promoters' shares, given that securities transfers are not goods or services. One view denies credit since the transaction concerns securities; the contrary view treats underwriting, listing and related consultant charges as taxable services supplied to the company in the course of business and therefore eligible for input tax credit, subject to statutory conditions.