It is important to note that the CSR activities play a crucial role in the development of the society and the economy.
NEW DELHI: The Indian Union Budget 2023-24 has proposed amendments in the Goods and Services Tax (GST) Act and has declared that input tax credit cannot be claimed on goods and services used or intended to be used for Corporate Social Responsibility (CSR) activities. This amendment has been brought through the Finance Bill 2023.
This change in the Central GST Act has created mixed reactions among the industry experts. On one hand, KPMG in India Partner, Indirect Tax, Abhishek Jain believes that this move will clear the air on the ambiguous issue and will provide clarity, while on the other hand, AMRG & Associates Partner Priyanka Sachdeva believes that it is a wrong step. She feels that the government should have dealt with the major issue of input tax credit and provided relief to the recipients who pay tax to the supplier but do not receive a deposit of the tax.
In addition to this, the amendments proposed in the Finance Bill 2023 also aim to decriminalize certain offenses under the indirect tax law and double the threshold for launching prosecution under the tax law to Rs. 2 crore. However, the limit has been retained at Rs. 1 crore for fake invoicing cases.
It is important to note that the CSR activities play a crucial role in the development of the society and the economy. Disallowing the input tax credit for such activities might discourage the companies from indulging in such activities and impact the growth of the economy.
In conclusion, the proposed amendment in the GST Act with regard to disallowing the input tax credit for CSR activities has created a mixed response from the industry experts. While some believe it will clear the ambiguity around the issue, others believe that the government should have focused on providing relief to the recipients of input tax credit instead.
Input Tax Credit Restriction for Corporate Social Responsibility: A Step in the Right Direction
India CSR CEO, Rusen Kumar, commends the recent proposal in the 2023 Finance Bill to restrict input tax credit for goods and services used for Corporate Social Responsibility (CSR) activities. Kumar believes that this move is a positive step towards creating a fair and balanced tax system.
According to Kumar, companies are already taking advantage of various government schemes and incentives, making it inappropriate to provide additional tax credits for social programs. The restriction on input tax credit for CSR activities would help to ensure that companies are not double benefiting from their contributions to society.
Kumar further adds that this decision will provide clarity and eliminate ambiguity surrounding the issue, which has been a source of debate in the past. The new proposal would clear up any confusion surrounding the eligibility of input tax credit for CSR activities and promote a more transparent tax system.
Overall, the restriction on input tax credit for CSR activities is a step towards creating a fairer tax system, as well as ensuring that companies are not receiving undue benefits for their contributions to society.
(Inputs from PTI)
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