The Tax Publishers

GST--Input Tax Credit

Are CSR Expenses Eligible for ITC

CA. Satyadev Purohit

Corporate Social Responsibility expenses are required to be compulsorily incurred by a company by virtue of the provisions enshrined under section 135 of the Companies Act, 2013. The learned author seeks to analyse an issue as to whether CSR expenses are eligible for input tax credit under section 16 of the Central Goods and Services Tax Act, 2017.

1. Allowability of input tax credit under GST

The provisions relating to eligibility and conditions for taking input tax credit are enshrined under 16 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act"). As per Sub-section (1) of section 16 of the CGST Act, 2017, every registered person shall 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.

It is clear from the above provision that one of the basic conditions for claiming input tax credit is that the inward supply of goods or services or both are used or intended to be used in the course or furtherance of his business.

Section 17 of the CGST Act deals with apportionment of credit and blocked credit. Sub-section (5) of section 17 contains the list of goods or services which are not eligible for input tax credit.

As per section 17(5)(h) of the CGST Act, 2017, input tax credit shall not be available in respect of "goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples".

The above provision thus restricts credit of the goods which were written off or disposed by way of gift or free samples.

2. Meaning of gift

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