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Diwali Gift's

saurabh jain (manager) (174 Points)

31 October 2017

Hello Sir,
can we avail input Tax credit for the Diwali gifts PURCASE for our labour,we have tax invoice in our firm name and gifts purchase from regular dealer

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8 Replies

Anmol Singla (808 Points)
Replied 31 October 2017

salary and wages are out of the scope of gst, so for any gifts for them itc is not available

Prity Agarwal (Chartered Accountant) (144 Points)
Replied 31 October 2017

These expenses are incurred for promotion of the business. Hence, we can claim input tax credit for the same.

Prity Agarwal (Chartered Accountant) (144 Points)
Replied 31 October 2017

These expenses are incurred for promotion of the business. Hence, we can claim input tax credit for the same.

Saikrishnan S (Chartered accountant - Plintron) (186 Points)
Replied 31 October 2017

Anything in relation to business / furtherance of business can be claimed as an input tax credit.

However, sweets given to our own labour comes under the category 'EMPLOYEE RELATED" and any payments relating to benefits for employees cannot be taken as INPUT CREDIT.

Conclusion - INPUT CANNOT BE TAKEN

saurabh jain (manager) (174 Points)
Replied 31 October 2017

Mr Saikrishnan S ji, now question comes that as per clause (h) of section 17(5) of cgst act 2017 , the input tax credit with respect to goods disposed of by way of gifts shall not be allowed, The definition of goods as per section 2(52) means every kind of movable property........ which are agreed to be served before supply or under a contract of supply. in order to call a commodity as goods, it is necessary that they are used for the purpose of supply. To call a particular transaction as a supply it should have consideration involved or the same should be mentioned under schedule 1of the act. There is neither any consideration nor is there any reference of gifts under schedule 1 except of those given to employees. in such circumstances, these Diwali gifts move out of the ambit of Goods from the perspective of business unit purchasing such gifts. it should be noted that the same Diwali gifts shall be treated as supply of goods for vendor who have sold such gift's as per section 16 what is required is that there should be tax charged on supply of goods by a vendor to tax payer. it nowhere restrict that such items which are purchased should also qualify as goods for the purchaser. therefore it can be construed that Diwali gifts fulfill the consideration of section 16 for claming of input tax credit

saurabh jain (manager) (174 Points)
Replied 01 November 2017

waiting for your reply

Saikrishnan S (Chartered accountant - Plintron) (186 Points)
Replied 01 November 2017

I have replied for sweets alone sir as mentioned in my early reply.

Section 17(5) (b) (i) specifically restricts the input tax credit with respect to food and beverages which means it is a blocked credit. Hence any sweets or beverages bought for workers/employees shall not be eligible for claiming input tax credit.

Your interpretation relating to other diwali gifts is right which means for that INPUT shall be taken.