Subsidy receipt from government

[Ramanathan Seshan]

Dear Experts,

We have received the Integrated Development of Leather Sector (IDLS) subsidy from the government, which we treated as income. However, during our departmental audit GST officers inquired why we have not charged or discharged GST on this subsidy. Our understanding is based on section 2(31) of the GST Act, which excludes government subsidies from GST. 

Unfortunately, the officers are not accepting this explanation. To resolve this issue, we would like to ask if you could provide any notifications or circulars that clarify the GST treatment of government subsidies and confirm that they should not be subjected to GST charges.

Regards,

S Ram

AI Summary

Company disputes GST on government subsidy under sector development scheme, citing GST Act exclusion provisions A company received a government subsidy under a sector development scheme and treated it as income without charging GST. During a departmental audit, GST officers questioned the absence of GST on the subsidy. The company relied on the GST Act provision excluding government subsidies from GST but faced disagreement from the officers. The company sought authoritative notifications or circulars to confirm that government subsidies are not subject to GST, aiming to resolve the dispute.