Partial recovery of Mobile phone from employee-GST Input, Goods and Services Tax - GST

[ROHIT GOEL]

Dear sirs,

As per policy of one of our clients, they provide mobile phone to employees as per their pay scale. For example, Scale A employees are allowed phones upto ₹ 10,000/-. If employee intends to purchase more expensive mobile, say for ₹ 15000, then balance of 5,000/- is recovered from him.

Now in effect, mobile is capitalised by 10,000/- in books but GST ITC is taken on entire invoice value of 15000. Whether this is correct or instead recovery of 5000/- should be treated as sale and corresponding ITC reversed?

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

Since you are recovering ₹ 5000/- from your employee for all practical purpose the consideration in excess of 10000/- is paid by the employee. Therefore ITC of gst paid on ₹ 5000 belongs to the employee. Therefore you have to reverse the ITC of gst paid on 5000/-.

The moot question is whether you recover ₹ 5000/- along with gst paid on such amount or not.

[Ganeshan Kalyani]

Sir, if the asset is capitalised with GST then ITC cannot be taken.