Can we claim ITC on CSR activities as per Companies (CSR Policy) Rules, 2014?

By Laxman Yalla

Article Assistant


Prepared On:
17/02/22


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Is ITC Available on CSR Activities?

The Gujarat Authority of Advance Ruling (AAR) recently given a statement on Corporate Social Responsibility (CSR) activities

This ruling came in a case made by ADAMA India private limited, the AAR said that ADAMA private ltd is not eligible for ITC under GST laws for the CSR activities.


Is ITC Available on CSR Activities?

Adama India private ltd, supplies insecticides, fungicides and herbicides. The applicant submits as per companies act 2013 section 135, it has been spending certain amount (i.e., 2% of average net profit) on CSR activities, as these activities are mandatory and in the course of business operations these are eligible for ITC as the vendor charging GST on inputs purchased for CSR activities.

The applicant submitted that every registered person is eligible to claim ITC on the input of goods/services as per the section 16 of CGST act, if the inputs are used in the course of furtherance of business and says that these activities can't be claimed as gifts as these are obligatory and mandatory in nature.


According to the companies (CSR policy) rules 2014, CSR activities CSR activities shall be undertaken by the company as projects or programs or activities excluding the activities undertaken in it's normal course of business. Rule 2(d) of CSR policy defines CSR activites as satutory obligatory in nature and these activities shall not include

To begin with take a look at the snapshot of advantages of choosing either LLP or private limited form of business.

  • Activities under taken in the pursuance of normal course of business of company
  • Activity taken outside India except training of sports personnel representing state or union teritory or India
  • Contribution of amount to political party directly or indirectly
  • Activities undertaken for beneficial to company employees only etc..,

Considering the above definition section 16(1) of CGST act bars CSR activities from input/input services which means CSR activities are not eligible for claiming ITC.

Conclusion:

“CSR activities, as per Companies (CSR Policy) Rules, 2014 are those activities excluded from the normal course of business of the applicant and therefore not eligible for ITC, as per Section 16(1) of the CGST Act” the AAR said

Disclaimer:

“Information contained herein is for informational purposes only and should not be used in deciding any particular case. The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Though utmost efforts have been made to provide authentic information, it is suggested that to have better understanding and obtaining professional advice after thorough examination of particular situation.”