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    Treatment of GST on Goods Purchased Under CSR Contribution

    Posted By : Kamal / Published on : 12-Feb-2022 02:11 PM / View : 928 / Comment : 1

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    Dear Members,

    We have planned to distribute educational equipment to underprivileged students studying in various levels.

    The equipment purchase including GST ?

    How do we treat the CST Contribution for Compliance ?

    1. Purchase materials including GST and should not claim GST input

    Ex:- CST Contribution is Rs. 1 Lakh

    purchase material worth Rs. 1 Lakh (including GST 18,000/-)

    or

    2. Purchase the materials to the extent of Rs. 1 Lakh and pay GST 18% GST and total payout Rs. 1,18,000/-

    Payout Rs. 1,18,000/- and claim 18,000/- the input tax credit ?

    Which is the best practice of compliance ??
    Read more on : contribution under purchased goods treatment

    • Under the Goods and Services Tax (GST) regime, if a company purchases goods for the purpose of fulfilling its Corporate Social Responsibility (CSR) obligations, the tax treatment would depend on whether the CSR activity is covered under Schedule VII of the Companies Act, 2013.

      If the CSR activity is covered under Schedule VII, it would be considered as a business activity and the GST paid on the purchase of goods can be claimed as an input tax credit by the company. The company can utilize the input tax credit for payment of output GST liability on its taxable supplies.

      However, if the CSR activity is not covered under Schedule VII and is considered as a charitable activity, the GST paid on the purchase of goods cannot be claimed as an input tax credit by the company. In such a case, the company would need to bear the GST cost as an additional expense.

      It is important to note that the treatment of GST on CSR contribution may also depend on the nature of the supplier of goods and the documentation supporting the transaction. Companies should maintain proper records and documentation to support their claim of input tax credit, if applicable.

      In summary, the treatment of GST on goods purchased for CSR contribution would depend on whether the CSR activity is considered as a business activity or a charitable activity under Schedule VII of the Companies Act, 2013. If the CSR activity is a business activity, the company can claim input tax credit on the GST paid on the purchase of goods. However, if the CSR activity is a charitable activity, the company cannot claim input tax credit on the GST paid.

      28-03-2023 / 12:12:45 PM
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