Reversal of common ITC as per R/42 on Incentive received in Form of Foreign Tour

[ANKIT SHAH]

Whether incentive received by the Distributor in the form of Foreign Tour from the Principal Supplier (say for eg. manufacturer) will be treated as Exempt Supply. If yes, then whether thre will be reduction of common ITC as per R/42?

AI Summary

Debate on GST Treatment of Distributor's Foreign Tour Incentive and ITC Reduction u/r 42. Legal Scrutiny Ongoing. A discussion on whether an incentive received by a distributor in the form of a foreign tour from a principal supplier should be treated as an exempt supply under GST, and whether this would necessitate a reduction of common ITC as per Rule 42. Participants debated if such incentives, considered discounts, require ITC reversal. Opinions varied, with some asserting that no exempt supply occurs since no supply is made by the distributor, thus Rule 42 does not apply. Others noted ongoing legal scrutiny, with show cause notices being issued on similar incentive matters.