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Eligibility of ITC Diwali gifts..

22 May 2020

Dear member, we purchase dryfruits packet and distribute it to our customers during diwali as a business promotion expense, is it ineligible as per sec 17(5). please suggest..

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8 Replies

Asha Kanta Sharma (Manager - Finance & Accounts) (10519 Points)
Replied 22 May 2020

ITC not admissible on procurement of Gifts. ITC not available on gifts' when no GST is being paid on their disposal, section 17(5) of the CGST Act, 2017 blocks such credits: AAR

Nrusingh Beura (55 Points)
Replied 22 May 2020

Sir, Supplier also charge gst and we have tax invoice with gst breakup

jashwanth (CA-PRACTICE) (400 Points)
Replied 22 May 2020

We can't claim input when the goods are distributed as sample , gift, damage as per 17(5)

1 Like

Pankaj Rawat (GST Practitioner) (55030 Points)
Replied 23 May 2020

A conjoint reading of Section 17(5)(h) of CGST Act, 2017 and Schedule I to CGST Act if the goods are disposed of by way of gift, section 17(5)(h) of
CGST Act, 2017 shall be applicable and accordingly input tax credit in respect of the same shall not be allowed

Roma jain (7 Points)
Replied 23 May 2020

As per section 17 (5) we can't claim input tax when we are distributed gift.

1 Like

Asha Kanta Sharma (Manager - Finance & Accounts) (10519 Points)
Replied 23 May 2020

The main concept is if you are not paying tax on its disposal then ITC is not allowed be it like, Free Samples, Gifts, Loss of Goods, Fire, Theft etc

Rajkumar Patel (602 Points)
Replied 23 May 2020

If your gift amount More than 50,000 Rs per employee per annum, GST is levied on such supply Without any Consideration under schedule 1 and Paid gst on inward supply of such good can also not be claimed.