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Input credit for donation should be taken or not

ABHIJIT MANNA (ACCOUNTANT) (444 Points)

17 August 2021

If I donate someone, can I take gst input from that donation bill ?

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11 Replies

VIKAS ESNAPURAM (CA-JOB) (226 Points)
Replied 17 August 2021

As you are donating it is merely in your own interest and it is not treated as for consideration hence it is not supply itself and GST is not applicable as such on the donation.

The term, “supply” has been inclusively defined in the Act. The meaning and scope of supply under GST can be understood in terms of the following six parameters, which can be adopted to characterize a transaction as a supply

1. Supply of goods or services. Supply of anything other than goods or services does not attract GST

2. Supply should be made for a consideration

3. Supply should be made in the course or furtherance of business

4. Supply should be made by a taxable person

5. Supply should be a taxable supply

6. Supply should be made within the taxable territory

zulfikar sipai (157 Points)
Replied 17 August 2021

Yes claim the itc

ABHIJIT MANNA (ACCOUNTANT) (444 Points)
Replied 17 August 2021

In a construction business there are lot of donation @ viksh ji, so if I purchase somethings with GST so it will be treated as consideration or not, but all this for business purpose, not only own interest.

VIKAS ESNAPURAM (CA-JOB) (226 Points)
Replied 17 August 2021

@ zulfikar will it be considered as supply as it is for no consideration and if it is not a supply itself then GST should not be charged at all.

VIKAS ESNAPURAM (CA-JOB) (226 Points)
Replied 17 August 2021

@ abhijit Except for schedule I items nothing can be considered as supply if made without consideration. It would be great if you can further elaborate on your query.

zulfikar sipai (157 Points)
Replied 17 August 2021

Donation is not gift and subject to gst the charity must remit to the ATO 1/11th of the donation as gst .the doner will entitle to claim gst credit for the gst included in the amount paid provided they are registered for GST ,and the donation has been made as a part of the donor 's business .as per above you claim the itc

VIKAS ESNAPURAM (CA-JOB) (226 Points)
Replied 17 August 2021

@ Zulfakir these are the lines of the first para from where you copied your above response

Providing the donor is not receiving a material benefit in return for the payment, there are no GST consequences.

So, let's wait for Abhijit to elaborate on the query and solve it accordingly.

VIKAS ESNAPURAM (CA-JOB) (226 Points)
Replied 17 August 2021

I am sorry I misunderstood the question

If it is not treated as supply as per Entry 1 of Schedule 1; then ITC will be blocked as per sec17(5)(h).

If treated as supply we can claim ITC.

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 17 August 2021

No you cannot take gst credit on donation

Rajendra Prasad (Employee Private) (1824 Points)
Replied 18 August 2021

If the Tax payer is a company and the donation given under CSR activity, then what is the scenario.

VIKAS ESNAPURAM (CA-JOB) (226 Points)
Replied 19 August 2021

As per case laws, If CSR expenditure is within the limit then you can claim ITC, because as it is mandated by companies act and is considered as in the course or furtherance of business

If expenditure is made more (i.e >2%) it will be considered as made voluntarily and will be treated as gift and hence ITC will be blocked under 17(5) and note that it is applicable only for goods.

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