Under the newly proposed Union Budget 2023 the Union Ministry has proposed certain important amendment in GST by which Corporate Social Responsibility ( CSR ) cannot be claimed as Input Tax Credit ( ITC )
Section 17(5) of CGST Act is being amended to provide that input tax credit shall not be available in respect of goods or services or both received by a taxable person, which are used or intended to be used for activities relating to his obligations under corporate social responsibility referred to in section 135 of the Companies Act, 2013.
Section 135 of the Companies Act says that every company which has net worth of more than 500 crore rupees or turnover of one thousand crore rupees or net profit of 5 crore rupees during the year immediately preceding the financial year shall constitute a corporate social responsibility committee of the board to execute corporate social responsibility.
Section 17(5) of CGST Act is also referred to as blocked credits. It lists the purchases in which input tax cannot be claimed and GST is paid. It is a very important provision for a regular taxpayer under GST.
CSR expenses under Section 135 of the Companies Act includes, promoting health care which includes sanitation and preventive health care, Eradicating poverty, hunger and malnutrition, contribution to the Swachh Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water etc.
This amendment has been made through the Finance Bill 2023.
The amendment also proposes to insert a new section 158A in CGST Act to enable sharing of the information furnished by the registered person in his return or application of registration or statement of outward supplies. Return filing under CGST Act also proposed to ament.
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