Free supply of goods as a part of CSR activities is not restricted under Section 17 (5) (h) of CGST Act, 2017
Authority for Advance Ruling — CSR activities – The Applicant is engaged in the business of manufacture and sale of sugar and allied products. In order to comply with the Corporate Social Responsibility (CSR) in terms of Section 135 of the Companies Act, they carry out various activities. The Applicant sought an Advance Ruling as to whether expenses incurred by the Company in order to comply with requirements of Corporate Social Responsibility (CSR) under the Companies Act, 2013 qualify as being incurred in the course of business and eligible for input tax credit in terms of the Section 16 of the Act, 2017; whether ITC in relation to CSR activities which have been obligated under a law are restricted under Section 17 (5) of CGST Act, 2017, if yes, whether free supply of goods as a part of CSR activities is restricted under Section 17 (5) (h) of Act, 2017; whether goods and services used for construction of school building which is not capitalized in the books of accounts is restricted under Section 17 (5) (c) / 17 (5) (d) of CGST Act, 2017.
Held that:- The Hon’ble Authority for Advance Ruling ruled that CSR expenses are not incurred voluntarily, accordingly, they do not qualify as gifts and therefore its credit is not restricted under Section 17(5) of the Act, 2017. Free supply of goods as a part of CSR activities is not restricted under Section 17 (5) (h) of the Act, 2017. ITC is not available to the extent of capitalization.
Free supply of goods as a part of CSR activities is not restricted under Section 17 (5) (h) of CGST Act, 2017
Authority for Advance Ruling — CSR activities – The Applicant is engaged in the business of manufacture and sale of sugar and allied products. In order to comply with the Corporate Social Responsibility (CSR) in terms of Section 135 of the Companies Act, they carry out various activities. The Applicant sought an Advance Ruling as to whether expenses incurred by the Company in order to comply with requirements of Corporate Social Responsibility (CSR) under the Companies Act, 2013 qualify as being incurred in the course of business and eligible for input tax credit in terms of the Section 16 of the Act, 2017; whether ITC in relation to CSR activities which have been obligated under a law are restricted under Section 17 (5) of CGST Act, 2017, if yes, whether free supply of goods as a part of CSR activities is restricted under Section 17 (5) (h) of Act, 2017; whether goods and services used for construction of school building which is not capitalized in the books of accounts is restricted under Section 17 (5) (c) / 17 (5) (d) of CGST Act, 2017.
Held that:- The Hon’ble Authority for Advance Ruling ruled that CSR expenses are not incurred voluntarily, accordingly, they do not qualify as gifts and therefore its credit is not restricted under Section 17(5) of the Act, 2017. Free supply of goods as a part of CSR activities is not restricted under Section 17 (5) (h) of the Act, 2017. ITC is not available to the extent of capitalization.