DIWALI GIFTS: IS ITC AVAILABLE?
Diwali is the time to gift to your friends, family, employees, customers and clients.
Let us have a look whether ITC is available for purchase of Diwali gifts for vendors, customers or consultants.
Section 16: Taxpayer
is entitled to take ITC on tax charged on supply of goods or services
which are used in the course of furtherance of business. In the course
of furtherance of business: an act of
advancement or promotion of
business for its sustained growth and profitability.
Diwali gifts are given to the person related to business for good business relations for the advancement of business.
It
should be noted that Diwali gift shall be treated as supply of goods
for the vendor who has sold such gifts and tax should be charged by the
supplier. Therefore, Diwali gifts fulfill the condition of Section 16
and ITC can be claimed.
Issue 1: ITC available on sweets and beverages purchased for distribution to employees on Diwali?
Solution: ITC
on food and beverages comes under blocked credit as per section 17(5).
Hence ITC is not available on foods and beverages purchased for
employees and workers.
Issue 2: Gifts to employee
Solution: Salary payable to employees shall not attract GST as it is not treated as Supply.
Gifts
given by employer exceeding the value of Rs. 50,000 shall be liable to
GST. High-value gifts given such as car, home, gold etc exceeding Rs.
50,000 is liable to GST.
ITC is NOT available such products gifted to employees.
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