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ITC on Employee reimbursement

17 April 2021

Sir,

we used to reimburse employees conveyance allowances like travel reimbursement and hotel accommodation reimbursement .can we claim ITC.

please suggest us in this regard

regards,
Sreeramulu Kanchanam

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4 Replies

Prathyusha Varma (ArticleShip) (393 Points)
Replied 18 April 2021

No ITC will be allowed on employee benefits or employee reimbursements.

if expense are related to business ask vendors to raise invoice in your office name

Sreeram Kanchanam (43 Points)
Replied 18 April 2021

You mean if we stayed in hotel room ,then if the vendor raised invoice against our company,then can we claim ITC on the same.
what is the process to claim ITC on railway tickets, air tickets and bus tickets of Employees business trips.
please suggest us in this regard

regards
Sreeramulu Kanchanam

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 18 April 2021

Hey ,

You can claim input tax credit on the railway ticket only if it is for your business purposes only.

As per section 16(1) ,

“Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.”

So its very important to note that no input tax credit will be allowed for personal use.

Also it is important to note that your GST number should be on the ticket copy and they upload the same on GST portal