Section 17(5) of Central Goods & Services Tax Act, 17 (for brevity CT Act) deals with blocked credits. The said section starts with non-obstinate clause overriding the general provisions of Section 16 of CT Act which deals with credit entitlements. In other words, despite of the fact that a particular goods or input services is used for furtherance of business, the credit of tax paid on such items shall not be entitled if such item is mentioned vide Section 17(5). In this article, we try to analyse, the sub-section (h) of Section 17(5) with the help of certain recent advance rulings.

Section 17(5)(h) states that input tax credit shall not be available with respect to goods lost, stolen, destroyed, written off or disposed by way of gift or free samples. That is to say, if a supplier who has purchased certain goods and disposed the same by way of gift or free samples, the supplier is not entitled to take credit despite of the fact such gifts or free samples would yield additional business to the supplier. With the above basics in place, let us proceed to examine certain advance rulings to better understand the ambit of Section 17(5)(h).

Read more: Gifts, Discounts, Credits & Impact Thereof - GST

‘Housing for All’ is one of the biggest agendas of the current government. To achieve this agenda, the government has been granting various tax sops have been extended from time to time to builders/developers and other stakeholders. In this article, we explore the some of the sops pertaining to taxation of affordable housing from the perspective of goods and services tax laws (GST laws) and income tax laws.

Incentives under Income Tax Laws:

For Seller:

Section 80 IBA of Income Tax Act, 1961 (for brevity ‘Income Tax Act’) deals with deductions in respect of profits and gains from certain housing projects. Vide such section, where the gross total income of an assessee includes any profits and gains derived from business of developing and building housing projects, subject to certain conditions, 100% of such profits and gains are allowed as deduction.

Such deduction is allowed to the assessee only if he satisfies all the conditions mentioned vide Section 80 IBA. Earlier the said deduction was extended vide Section 80 IB(10). Now, the deduction is provided to assessee vide Section 80 IBA. The conditions attached to the said section have undergone certain amendments vide Finance (No.2) Bill, 2019, which is dealt at appropriate place.

Read more: Affordable Housing - GST & Income Tax Perspective

Foreign Contribution Regulation Act, 2010 (‘FCRA’) got the assent of the Honourable President on 27^th September 2010 and came into force with effect from 11^th May 2011.  By virtue of this, the earlier Foreign Contribution Regulation Act, 1976 got repealed. The preamble to the current act states that it is an act to consolidate the law to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit the acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto. The Ministry of Home Affairs, Government of India administers the Act, as it involves safeguarding national security.  

The Central Government (‘CG’) vide Notification G.S.R. 349(E), dated 29^th April 2011 notified Foreign Contribution Regulation Rules, 2011 (‘FCRR’). To bring in more transparency and better governance, FCRR were amended subsequently in the year 2012 vide G.S.R. 292 (E), dated 12^th April 2012 and in the year 2015 vide G.S.R. 966(E), dated 14^th December 2015.  Most recently, FCRR were amended in 2019 vide G.S.R.199(E), dated 7^th March 2019. 

Read more: Foreign Contribution Regulation Act - Recent Amendments

The Ministry of Corporate Affairs (MCA) has put an announcement that the new lease accounting standard, Ind AS 116 will get implemented from 1^st April 2019. The new Standard, globally implemented in several countries from 1^st Jan 2019, is called IFRS 16. The Standard eliminates the 6-decade old distinction between financial and operating leases, from lessee accounting perspective, thereby putting all leases on the balance sheet. Ind AS 116 introduces a single lease accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.

Assessment of whether an arrangement is, or contains, a lease, will be one of the biggest practical issues when applying the new standard. Under the new standard, a lease is a contract, or part of a contract, that conveys the right to use an asset (underlying asset) for a period of time in exchange for consideration. To be a lease, a contract must convey the right to control the use of an identified asset, which could be physically distinct portion of an asset such a floor of a building. A contract conveys the right to control the use of an identified asset if, throughout the period of use, the customer has the right to obtain substantially all of the economic benefit from the use of the identified asset and direct the use of identified asset.

Read more: Transforming the way of Accounting for Leases – Ind AS 116