Chemical and Appratus

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A poultry business is seeking advice on whether they can claim input tax credit (ITC) on laboratory chemicals and apparatus purchased for animal testing. Although the lab services are provided free to farmers, the business argues this encourages sales of their taxable feed supplement product. The consensus is that if these free services are considered a marketing or sales promotion expense rather than a separate supply, ITC on the related purchases should be claimable.

Rajkumar Gutti

Rajkumar Gutti (Querist)

25 December 2024 Our buying and selling poultry product is taxable.
We are setup a laboratory for poultry animal testing purpose. This laboratory service rendering to farmer iby us is free of cost. Also appointed veterinary Doctor for giving free advice to poultry rearing farmers. ( Our selling feed supplement product is taxable ).

My question is when we are buying laboratory materials like as chemical, apparatus lab machinery
Can we are eligible to take input on above purchases
For giving free services to farmers their mind is persuade to buy our feed supplement product.
Please advice,

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

25 December 2024 Yes, it is part & parcel of your business marketing strategy, hence ITC can be availed.

Rajkumar Gutti

Rajkumar Gutti (Querist)

25 December 2024 But sir, we are giving free service, and no gst is charged on revenue side. Even though can ITC avail?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

25 December 2024 If you consider it as a separate supply which is free, you cannot claim ITC. But consider it as marketing cost and not service, because based on the facility you are selling your product. In that case you will be able to claim ITC.

Rajkumar Gutti

Rajkumar Gutti (Querist)

26 December 2024 Presently we are debiting expenses to Laboratory expenses. Can we amend the expenses as marketing or sales promotion exp. So that we can avail input.
What we do consider as marketing cost

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

26 December 2024 Create a sub-group under sales promotion expenditures:: the laboratory expenses.

Rajkumar Gutti

Rajkumar Gutti (Querist)

26 December 2024 Ok Thanks sir धन्यवाद

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

26 December 2024 You are welcome.

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