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Itc on Diwali gift given to employees

Radhakrishnan (Accounts Officer) (122 Points)

30 October 2020

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

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JATINDER KUMAR (Accountant) (3662 Points)
Replied 30 October 2020

ITC not allowed

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CA. Heet Shah (Tax Consultant & Practitioner) (6178 Points)
Replied 30 October 2020

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 (Accounts Officer) (122 Points)
Replied 30 October 2020

It is not for supply. itc not allowed. thank you.

CA. Heet Shah (Tax Consultant & Practitioner) (6178 Points)
Replied 30 October 2020

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

CA. Heet Shah (Tax Consultant & Practitioner) (6178 Points)
Replied 30 October 2020

So no ITC can be claimed for same

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CA. Heet Shah (Tax Consultant & Practitioner) (6178 Points)
Replied 30 October 2020

So no ITC can be claimed for same

Shivam RC (Student) (23683 Points)
Replied 30 October 2020

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.