Master in Accounts & high court Advocate
9610 Points
Posted on 19 December 2024
Given the scenario: - Assets and vehicles are purchased for a director's personal use. - The tax invoice is in the name of the director c/o the company. Here are the implications:
_GST Credit:_ 1. _Not eligible_: As the assets and vehicles are purchased for the director's personal use, the company is not eligible to claim GST credit.
2. _Section 17(5) of the CGST Act_: This section specifically restricts the availability of GST credit on goods and services used for personal consumption. _Depreciation:_
3. _Not eligible_: As the assets and vehicles are purchased for the director's personal use, the company cannot claim depreciation on these assets.
4. _Section 36 of the Income-tax Act_: This section allows depreciation only on assets used for business purposes. However: - If the company has a clear policy allowing directors to use company assets for personal purposes, and the company is reimbursed for the personal use, the company might be able to claim GST credit and depreciation.
But this would require careful documentation and justification. To avoid potential disputes:
1. _Maintain clear documentation_: Ensure that all transactions, including the purchase and personal use of assets,
In summary: - The company is not eligible to claim GST credit or depreciation on assets and vehicles purchased for a director's personal use. - Clear documentation and professional advice are essential to avoid potential disputes.