No GST input tax credit on CSR expense

The Gujarat bench of the Authority for Advance Rulings (AAR) recently held that corporate social responsibility (CSR) activities under the Companies (CSR Policy) Rules are excluded from the normal course of business. Its ruling came in a case where the applicant was a private limited company, Adama India. The AAR said Adama India would not be eligible for input tax credit (ITC) under goods and services tax (GST) laws.

If this ruling is followed by GST authorities during assessments, it will be a big blow to India Inc which, in the backdrop of the pandemic, has spent heavily on CSR activities.