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block credit u/s 17(5)

18 January 2019

Hello everyone, one of my client is engaged in business of FMCG, for advertisement purpose they are sending acrylic boards to distributors and other franchise holders free of cost , can the company avail ITC on the the expense of buying acrylic board.

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CA Akshay Hiregange (Partner - Audit & Assistance) (4825 Points)
Replied 22 January 2019

Dear Riya,

Please refer section 17(5)(h) which restricts ITC when disposed or written off by way of gift.

Note gift in normal parlance is considered as something given occasionally and on a voluntary basis to another person without expecting anything in return.

Where, the same, could be factored into the pricing of the products (having appropriate costing documents), and it does not fall under the purview of gift, in my opinion, the ITC in relation to the same is eligible. If considered as gift/free sample - ITC ineligible.