Master in Accounts & high court Advocate
9615 Points
Posted on 15 January 2025
To determine if the Company can claim Input Tax Credit (ITC) on the canteen services, let's analyze the scenario:
Eligibility for ITC As per Section 16 of the CGST Act, 2017, ITC is eligible for:
1. _Business purposes_: Inputs or input services used or intended to be used for business purposes.
2. _Taxable supplies_: Inputs or input services used to make taxable supplies.
Canteen Services and ITC Eligibility Canteen services are considered as:
1. _Input services_: Canteen services are input services used for the benefit of employees.
2. _Business purposes_: Providing canteen services is considered a business purpose, as it is for the welfare of employees.
However, there's a specific restriction: 1. _Restriction under Section 17(5)(ii)(B)_*: ITC is not available for food and beverages, outdoor catering, beauty treatment, health services, and travel benefits to employees, except when these are used for business purposes (e.g., providing food to employees during business meetings).
Conclusion In your case, since the canteen services are provided to employees, ITC might not be eligible under Section 17(5)(ii)(B). However, if you can demonstrate that the canteen services are used for business purposes (e.g., business meetings, client entertainment), you might be eligible to claim ITC.