ITC on goods received for business promotion or marketing expenses

[Rohit K]

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.

AI Summary

Input tax credit on gifts to agents is blocked where distributions are gratuitous, unless treated as a supply under Schedule I.
Input tax credit is not available for goods disposed of by way of gift or free samples where distributions to agents are made without entitlement or consideration; administrative guidance confirms ITC on inputs and capital goods used for such gratuitous gifts is disallowed, unless the distribution is treated as a supply under Schedule I, in which case ITC could be claimed.