itc: No input tax credit on festive offers to merchants: TPS AAR

MUMBAI: The Tamil Nadu bench of the GST Authority for Advance Rulings (AAR) estimated that no input tax credit (ITC) would be available for a manufacturer who purchased goods such as Dubai tickets, gold coupons and home appliances to reward retailers who achieve their goals. According to the AAR, the main reason for such a booth is that the rewards would be used by retailers for their personal consumption.
During the holiday season, to support sales, manufacturers not only offer incentives to the end consumer in the form of discounts or giveaways, but also offer incentives to retailers who meet set targets.
In that case, GRB Dairy Foods, a private company engaged in the manufacture and supply of ghee, candy and other products, sought a ruling on whether the Goods and Services Tax (GST) paid on inputs / input services such as a trip to Dubai, Gold Vouchers, TVs or air coolers purchased by him to implement the ‘Buy N Fly’ promotional program are eligible for the ITC.
For example, during the promotion period, which lasted three months and applied to sales of ready-to-eat treats and snacks, masalas, etc., if the retailer met the target, they would be eligible for the corresponding reward. . The AAR bench took into account a 2018 ruling by the Maharashtra bench in the Biostadt case in India, where the ITC was found to be unavailable for the purchase of gold coins offered under a sales promotion program to its customers.

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