ITC ELEIGIBILITY FOR EMPLOYEES OUTSTATION TRIP STAY, TICKETS ETC, Goods and Services Tax - GST

[SAFETAB LIFESCIENCE]

Dear Experts,

Our comopany staff use to travel frequently for marketing purpose and stay at outstations.

Can we avail ITC of the GST paid Flight Tickets charged by flight operators, GST paid on Travel agency's bills, hotel bills. We are getting bills with IGST from outstation parties and CGST+SGST for local bills properly.

For e.g., Our company is in Pondicherry and our employees are staying in Mumbai. Some hotels are giving only CGST+IGST bills as their place of supply is Maharastra. In that case, shall we take ITC of that CGST and SGST ???

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

You have to prove that the expenditure incurred by you are in the course of or furtherance of business. As per section 17 (5) (g) of CGST Act, 2017 gst paid on goods or services or both used for personal consumption of your employees are not eligible for ITC.

[KASTURI SETHI]

Normally employees are deputed officially to attend urgent official work or meetings, seminars training etc. Such tour/deputation will be treated for the business or in the course of furtherance of business. In my view ITC can be taken. Correct invoice must be issued by the service provider. If invoice is incorrect, that can create problem. You are to ensure correctness of invoice before taking ITC.

[Alkesh Jani]

Sir,

I agree with Sh.Kasturiji, ITC can be availed for stay but not for foods and beverages which are specifically excluded in terms of Section 17(b)(i) of the CGST Act.Further, Section 17(b)(iv) "travel benefits extended to employees on vacation such as leave or home travel concession". Here word such as has been used means ITC can be availed other than personal use of employee and which has nexus with furtherance business. The Invoice should be issued properly by the supplier. Please correct me, if I am mistaken.

[KASTURI SETHI]

I agree with Sh.Alkesh Jani. 100% perfect.

[SAFETAB LIFESCIENCE]

Dear Sirs,

Thanks for your replies. I think my question in last para is not answered. That is my major doubt. Please do not mistake me.

Our company is in Pondicherry and our employees are staying in Mumbai. Some hotels are giving only CGST+IGST bills as their place of supply is Maharastra. In that case, shall we take ITC of that CGST and SGST ???

My major doubt is whether we can avail ITC of other state party's bill wherein CGST+SGST are charged . I know if they charge IGST , we can take credit.

[KASTURI SETHI]

Dear Querist, Your employee went out of State and he received service in the hotel there. Service provider provided service in his state. Hotel owner cannot charge IGST because there is no movement of goods or service out of State. He supplied service within his State and Service was consumed within State. In the situation explained by you, how can he charge IGST in bill ? IGST corresponds to erstwhile CST. Supply was within State. In my view, he can charge SGST and CGST and you can take ITC of same.Your person went there and received service there. Hotel owner (Suplier)did not make movement of goods or services out of State. Thus Service was consumed within State. By preparing the invoice in the name of your co. does not mean service was supplied out of State. Your employee's name with company ' name will be reflected in the invoice. In pre-GST era, asseessees used to take input service credit by mentioning name of employee and co. This is my view. I also request other experts to intervene.

[Alkesh Jani]

Sir, In this regard, my view is you can take credit of CGST and SGST, subject to condition that GSTR-1 and 3B are filed by the supplier. While taking credit there is no restriction that only IGST credit or CGST or SGST credit is to be taken. Moreover, the query raised by you is for the purpose of paying tax and it does not restrict for ITC. Pls correct me if mistaken.

[SAFETAB LIFESCIENCE]

Dear Sir,

Thanks for your reply and guidance. Earlier, we were told if we enter the suppliers GST number of other states and if we try to avail ITC (CGST+SGST), GST portal won't allow. Now, I am clear that even the other state supplier's local tax (SGST+CGST) can also be availed ITC by us. Thanks once again JI.

[KASTURI SETHI]

Sh.Jani Ji, You have echoed my views. Mean to say I agree with interpretation.

[Himansu Sekhar]

ITC of cgst and sgst bills of other states will not be allowed. The clarifications have been issued in this regards. Sgst act does not support such availment of credit.

[Ramaswamy S]

Travel charges (flight, travel agent service etc) are eligible for ITC (IGST).

Boarding and lodging not allowed as ITC. In case of boarding .and lodging the place of supply is intra state supply and not inter state supply

[KASTURI SETHI]

Sh.Himansu Sekhar Ji,

Will you pl. post Board's circular giving clarification in this regard for my knowledge sake ?

[Himansu Sekhar]

Sir, please refer to q 40 and 41 of tweet FAQ available at cbec site.

[KASTURI SETHI]

Dear Sekhar Ji,

You mentioned Board's circular ? FAQs have no statutory force. There is a lot of difference between Board's circular and FAQ, though both have no statutory. However, if it is so, denial of ITC is denial of substantive right to assessee. Need liberalization by way of amendment.

[Himansu Sekhar]

Sir,

I quoting the relevant provisions:

THE _________________ GOODS AND SERVICES TAX ACT, 2017

_________ IS THE NAME OF THE STATE

49 (5) (c) the State tax shall first be utilised towards payment of State tax and the amount remaining, if any, may be utilised towards the payment of integrated tax

(104) “State tax” means the tax levied under this Act;

Hence Bihar State tax cannot be utilised for payment of any other state tax. It is an example .

The FAQ is a clarification as I opined.

[KASTURI SETHI]

Yes. In pre-GST era, credit of VAT was for respective State only. Now SGST correspondents to erstwhile VAT.

[VaibhavKumar Jain]

ITC of CGST and SGST charged by hotel in another State can only be taken through ISD route, otherwise you can't avail such credit.

[SAFETAB LIFESCIENCE]

Dear Team,

Thanks for all your replies. Thanks to Mr. Vaibav for today's reply.

[KASTURI SETHI]

Sh.Jain Ji,. Your hardwork and search is appreciable. I think ISD route is foolproof and hassle-free. Nothing is lost if an assessee is registered as ISD but this was the sword of 'place of supply' will relegated to the background.

[PARTHASARATHY V]

Sir,

While officials traveling other states and stay involved there the service provider should give the bill only on CGST and SGST, In this situation you have to register as ISD (Input service Distributor) then get the bills in that GSTIN number, further pass on the credit to the respective location if you have multiple location operation or a particular location to which the expenses involved.

Also any other common expenditure involved that also can be routed through ISD.

[KASTURI SETHI]

Thanks Sir for enrichment of my knowledge.

[A K Reddy and CO]

Hi If u want to avail CGST and SGST paid in a particular state as ITC, U should have a registration in that state else the invoice should be an IGST invoice. Even it was clear that a particular state's CGST credit cannot be set off against the other state's liability, similarly with SGST credit also.