Sumary of No input tax credit for CSR activities, says Gujarat AAR:
- Amidst increasing spends for Covid relief, input tax credit (ITC) on goods or services for corporate social responsibility (CSR) has got tangled in contrary rulings by Authority for Advance Rulings (AAR).
- ”The applicant, Adama India, sought rulings on two questions — First, whether the inputs and input services procured by the applicant, in order to undertake mandatory CSR activities as required under the Companies Act, 2013, qualify as being in the course and furtherance of business, and therefore, be counted eligible for ITC.
- Second question is whether inputs and input services for providing notebooks and course materials for schools, construction of cement bench at public places, public urinals, auditoriums etc.
- Setback for corporatesHarpreet Singh, Partner, Indirect taxes at KPMG in India said that this ruling may come as a setback for lot of corporates who were keen on reducing their overall tax burden by claiming input GST credit on Covid initiatives as part of their CSR.
- “Lot of countries have provided for VAT exemptions/input tax benefits on Covid-related expenses (as part of CSR) in order to encourage participation by corporates.