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Itc on Diwali gift given to employees


Radhakrishnan (Accounts Officer)     30 October 2020

Radhakrishnan
Accounts Officer 
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what about purchase materials itc which are to be given to employees as Diwali gifts (each employee less than rs.50000 only per annum)
JATINDER KUMAR

JATINDER KUMAR (Accountant)     30 October 2020

JATINDER KUMAR
Accountant 
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ITC not allowed
Heet Shah

Heet Shah (Tax Consultant)     30 October 2020

Heet Shah
Tax Consultant 
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Originally posted by : Radhakrishnan
what about purchase materials itc which are to be given to employees as Diwali gifts (each employee less than rs.50000 only per annum)

If consideration is rec'd for supply than u can claim itc

Radhakrishnan

Radhakrishnan (Accounts Officer)     30 October 2020

Radhakrishnan
Accounts Officer 
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It is not for supply. itc not allowed. thank you.
Heet Shah

Heet Shah (Tax Consultant)     30 October 2020

Heet Shah
Tax Consultant 
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Originally posted by : Radhakrishnan
It is not for supply. itc not allowed. thank you.

Yes correct a supply made to employees for less than 50000 is not supply as per schedule 3

Heet Shah

Heet Shah (Tax Consultant)     30 October 2020

Heet Shah
Tax Consultant 
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So no ITC can be claimed for same

Heet Shah

Heet Shah (Tax Consultant)     30 October 2020

Heet Shah
Tax Consultant 
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So no ITC can be claimed for same

Shivam RC

Shivam RC (Student)     30 October 2020

Shivam RC
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Input Tax Credit ( ITC ) cannot be claimed for the goods which are being disposed of by way of Gift as it is specifically BLOCKED U/s 17(5) of the CGST Act 2017.

Moreover as per SCHEDULE I of the CGST Act 2017, If the value of the Gifts given to the employees exceeds Rs. 50,000, then it would be treated as a "SUPPLY". In this situation you can claim the ITC. But since in your case the value of the gifts is less than Rs. 50,000, you have to reverse the ITC claimed on your merchandise.

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