TaxTMI 
TaxTMI 
Subsidy receipt from government
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....ubsidy receipt from government<br> Query (Issue) Started By: - Ramanathan Seshan Dated:- 13-8-2025 Last Reply Date:- 22-8-2025 Goods and Services Tax - GST<br>Got 8 Replies<br>GST<br>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....
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.... 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....
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.... not be subjected to GST charges. Regards, S Ram Reply By Sadanand Bulbule: The Reply: Keeping in mind the provisions of Section 2(31) read with Section 15(2)(e), CBIC Circular No. 190/02/2021-GST dated 13/01/2023 reiterates that such subsidies/incentives are not includible in the value of supply and hence not liable to GST. Circular instructions being statutory in nature are binding on t....
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....he authorities working under the CGST Act and they cannot escape from complying them. Judicial precedents such as Indian Institute of Management, Nagpur [2020 (33) G.S.T.L. 140 (AAR-Mah.)] have held that government grants/subsidy not linked to price. So it is outside the GST domain. Many AARs are in favour of the taxpayers on this count. Reply By Sadanand Bulbule: The Reply: Refer Karnataka Adv....
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....ance Ruling No. KAR. ARDG 32/2023 dated 15/09/2023 rendered in the case of M/s. Hitze Boilers Pvt Ltd, - 2023 (9) TMI 1122 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA Kunigal Industrial Area,Kunigal, Tumakuru-572 130. Held that subsidy is not part of value of supply. Reply By KASTURI SETHI: The Reply: I support the views of Sh.Sadanand Bulbule, Sir. It is added that circulars have no s....
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....tatutory force but these are binding on the department, if contrary to the letter and spirit of GST Acts. Section 15(2)(e) is very much clear. No need of case law. Since the department is raising objection, you must check the definition of "Govt.". Do you qualify to the definition ? Reply By Prashant Maharishi: The Reply: Despite th e decisiosn of SC in ratan sm....
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....elting where it is held that circulars contrary to the law does not bind anyone. Reply By Sadanand Bulbule: The Reply: Refer the following landmark judgment on circular instructions: Supreme Court in Bengal Iron Corporation Vs. Commercial Tax Officer reported in 1993 (4) TMI 277 Reply By Sadanand Bulbule: The Reply: Also refer the following judgment on circular instructions: ....
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.... Supreme Court in Glaxo Smithkline Pharmaceuticals Vs. Union of India & Others reported in 2014 (3) TMI 113 Reply By Ramanathan Seshan: The Reply: Thanks sir Reply By Shilpi Jain: The Reply: Also refer to section 15(2)(e) (2) The value of supply shall include--- (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. Su....
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....bsidies by Govt. not includible in value on which GST to be paid<br> Discussion Forum - Knowledge Sharing ....