Assessee ABC ltd has GST registration in 2 states i.e. Maharashtra & Karnataka respectively. Earlier, the employees as well as foreign personnel of parent entity of the ABC Ltd used to stay in the Hotels of the Karnataka state for the business purpose. But since the Hotel Expenses started increasing, the management of ABC Ltd decided to take the Guest House on yearly rent Basis in Karnataka. The Question is whether ABC LTD can take GST Credit of same like of Hotel? Also whether is mandatory to add this guest house as additional place of Business.
The Guesthouse is used for meetings, stay purpose etc. for furtherance of Business.
Input Tax Credit on Guest House Rent: Navigating Section 17(5) Restrictions for Business Accommodation The query concerns whether ABC Ltd, registered in Maharashtra and Karnataka, can claim input tax credit (ITC) on a guest house rented in Karnataka for business purposes and whether this guest house must be added as an additional place of business. Experts provided varied opinions: some believe ITC is eligible as the guest house serves business purposes, while others warn of potential disallowance under Section 17(5)(c) & (d). One expert referenced an AAAR Odisha ruling, suggesting ITC might be disallowed despite business use. Another noted GST authorities previously disallowed similar credits. The discussion highlights uncertainty around this issue, with recommendations to either seek an advance ruling or carefully document the business purpose of the guest house. (AI Summary)
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