Availability of ITC on specific goods and services used amidst COVID-19
This is to apprise you regarding availability of Input Tax Credit (‘ITC’) on goods and services mandated to be provided by workplaces as per the Ministry of Home Affairs, Government of India (‘MHA’) amidst COVID-19. In this regard, MHA has issued following orders (‘MHA orders’) that were / are applicable during different points of time:
|
S. No. |
Order No. |
Order date |
Period |
|
1 |
MHA order No. 40-3/2020-DM-I(A) (hereinafter referred as Order 1) |
April 15, 2020 |
April 15, 2020 to May 3, 2020 |
|
2 |
MHA order No. 40-3/2020-DM-I(A) (hereinafter referred as Order 2) |
May 1, 2020 |
May 4, 2020 to May 17, 2020 |
|
3 |
MHA order No. 40-3/2020-DM-I(A) (hereinafter referred as Order 3) |
May 17, 2020 |
May 18, 2020 to May 31, 2020 |
|
4 |
MHA order No. 40-3/2020-DM-I(A) (hereinafter referred as Order 4) |
May 30, 2020 |
June 1, 2020 to June 30, 2020 |
|
5 |
MHA order No. 40-3/2020-DM-I(A) (hereinafter referred as Order 5) |
June 29, 2020 |
July 1, 2020 to July 31, 2020 |
Under GST law, ITC is available on all goods and services used for business purpose except the ones specified under Section 17(5) of the Central Goods and Services Tax Act, 2017 (‘CGST Act’). Section 17(5) inter-alia includes ITC on renting, hiring or leasing of motor vehicle, ITC on health insurance unless mandatory under any law for the time being in force, ITC on goods distributed as gifts, etc.
We are herein tabulating availability of ITC on various goods and services mandated at workplaces under various MHA orders:
|
S. No. |
Particulars |
Order 1 |
Order 2 |
Order 3 |
Order 4 |
Order 5 |
NITYA Comments |
|
1 |
Thermometer guns
|
Yes |
Yes |
Yes |
Yes |
Yes |
The taxpayers incur purchase these goods during course and furtherance of their business. Further these goods need to be mandatorily procured consequent to MHA orders. Hence ITC on these goods will be permissible. Notably, there is no restriction under Section 17(5) of the CGST Act for these goods.
Pertinently, if these goods are purchased for family members of employees, ITC will not be available. |
|
2 |
Sanitizers
|
Yes |
Yes |
Yes |
Yes |
Yes |
|
|
3 |
Chemicals for sanitizing workplaces
|
Yes |
Yes |
Yes |
Yes |
Yes |
|
|
4 |
Mask |
Yes |
Yes |
Yes |
Yes |
Yes |
|
|
5 |
Medical insurance for employees |
Yes |
No mandate |
No mandate |
No mandate |
No mandate |
Section 17(5) of the CGST Act restricts ITC on medical insurance unless mandatory under any law.
Order 1 inter-alia mandated taxpayers to take medical insurance for its employees. Hence, ITC on medical insurance policy is available if policy commences between April 15, 2020 to May 3, 2020.
|
|
6 |
Transport facilities for workers coming from outside |
Yes |
No mandate |
No mandate |
No mandate |
No mandate |
Section 17(5) of the CGST Act inter-alia restricts ITC on renting or hiring of motor vehicles having capacity less than 13 passengers unless mandatory under any law.
Order 1 inter-alia mandated taxpayers to arrange transport facility for employees between April 15, 2020 to May 3, 2020. Thus, taxpayers can claim ITC on renting or hiring of motor vehicles (less than 13 passengers) received during this period. Notably, ITC on renting or hiring of motor vehicles having seating capacity of 13 or more passengers is available without any restriction under Section 17(5) of the CGST Act.
|
|
Transport facilities where public or personal transport not feasible |
No mandate |
Yes |
No mandate |
No mandate |
No mandate |
Order 2 mandates taxpayers to arrange transport facility for employees between May 4, 2020 to May 17, 2020 where public or personal transport is not feasible. Hence, taxpayers can claim ITC on renting or hiring of motor vehicles services received during May 4, 2020 to May 17, 2020 where travelling to workplace through public or personal transportation was not feasible for employees. For this purpose, taxpayers will need to evidence non-feasibility of public or personal transportation for employees.
|
0 Comments