A company is into dealership of motor vehicles. They have purchased some gift items worth crores to give to their agents who bring the business to them. The gifts are given on monthly basis to their agents irrespective of the business they bring to them.
Since the outward supply is of vehicles and the inward supply is of some gift items, is ITC eligible in this case? Please help.
Input Tax Credit Not Allowed on Promotional Gifts to Agents Under Section 17(5)(h) CGST Act 2017 A company dealing in motor vehicles inquired about the eligibility of Input Tax Credit (ITC) on gift items given to agents for business promotion. The consensus among respondents was that ITC is not available for these gift items. According to Section 17(5)(h) of the CGST Act 2017, ITC is blocked for goods disposed of by way of gifts. Additionally, these gifts do not qualify as 'supply' under Schedule I, which would allow ITC. Thus, ITC on such promotional gifts is not permissible. (AI Summary)
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