Goods services procured for promotion are not eligible for ITC


Facts Involved : The applicant is engaged in business of manufacturing decorative paints. The applicant framed incentive schemes, depending on the market conditions to motivate dealers to lift their products. He distributed electronic items such as TVs, refrigerators, washing machines, mixers etc.as well as offered foreign trips under incentive schemes.


Issue Involved : The applicant sought an advance ruling on the question that whether the applicant is eligible to claim the GST Input tax credit on the items purchased for promotion of business.


Legal Position : As per CBIC circular no. 92/11/2019-GST dated 7-3-2019, it is clarified that 'input tax credit shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to the gifts or free samples distributed without any consideration'.


Held: The Authority for Advance Rulings concluded that the applicant is not eligible to avail input tax credit on inward supplies of goods and services which are attributable to incentives provided in form of gifts of goods and services to painters and dealers.