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Input tax on new year gifts to customers

vinay (Trainee CMA) (241 Points)

28 November 2018

We are trading paints. As part of business promotion we are giving new year diary's Pen stands and Key chain to our customers worth 50000 in total. Can we take input credit of the same???

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14 Replies

veer sakariya (CA) (47 Points)
Replied 28 November 2018

Yes we can claim the Input Tax Credit on the same as this gifts and give aways are in the form of Business Promotion Expenses.

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 28 November 2018

No... Input Credit not available if You are give gift or free...

1 Like

CA Rakesh Joshi (Chartered Accountant ) (1272 Points)
Replied 28 November 2018

Agree with @ RAJA P M.

One cannot claim ITC on gifts and free goods.

1 Like

veer sakariya (CA) (47 Points)
Replied 28 November 2018

If business assets are sold for free than Input tax credit of GST paid on such assets are denied, however in this case, assessee is procuring items for the purpose of giving them as gift to its customer. Therefore this kind of business expenses are eligible for claiming input tax credit.

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 28 November 2018

It's not business expenses...

2 Like

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Rakesh Sharma (article) (94 Points)
Replied 28 November 2018

section 17(5)h he can not claim credit

Kunal Pansari (Accountant) (1037 Points)
Replied 29 November 2018

I agree with Raja Sir. But my confusion is that, the gift items mentioned here are just purchased for free distribution. Since, they are not trading stocks, they can never be sold on monetary value.

pankaj kumar mishra (ACCOUNTANT) (167 Points)
Replied 29 November 2018

it is very confusion metter
becz 1 side it ture or 2side is wrong

becz gift give for business promotion
so as per gst act sec 16 sub sec 1
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 inputtax 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.

gift given for furtherance promoted of his business

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 29 November 2018

Originally posted by : pankaj kumar mishra

it is very confusion metter becz 1 side it ture or 2side is wrong...

.....gift given for furtherance promoted of his business

Sorry to My Dear All

We think it's a business related expenses. Okay Right...!!!

Just in My mind "Why not we think it's one of the Bribery/Curruption making business growth"

(just it's only my think. Not hurting to anyone).

Law Aspire (CS) (755 Points)
Replied 30 November 2018

Its employee benefit / welfare expenses,

not bribe or corruption

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 30 November 2018

Dear.,

Why You mean "employee benefit / welfare expenses"...??
Are You read the Query...?

In case it's as per Your reply then also ITC not available...

Law Aspire (CS) (755 Points)
Replied 01 December 2018

yes read the query, any company cannot give bribe to employees , it works for there well being

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 01 December 2018

Hello.... Where is the word of EMPLOYEE in the 1st Query...? I know employer to employee activities.... Okay....

vinay (Trainee CMA) (241 Points)
Replied 04 December 2018

Thanks all... I have asked the same to our auditor who is a CA and he said as its for the purpose of promoting business, we can take input credit of the same. Thanks a lot

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