The input tax credit on food and beverage supplies are blocked credit for registered person. That is, one cannot claim Input Tax Credit on Food. However, there are certain exceptions wherein the register person can claim ITC on food.
Input Tax Credit Exceptions on Food
The registered person can claim ITC on food,
– Where an inward supply of goods or services or both of food of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both,
– Also, if such inward supply of food is used in making either a taxable composite or mixed supply, then the input tax is allowed.
Also Read: Relevance of Supply under GST
Cases where ITC on food is not available:
The input tax credit on food is not available in following cases:
– Firstly, if goods or services or both of food are used for personal consumption
– Secondly, if foods as goods are stolen, lost, destroyed, written off or disposed of by way of gift or free samples.
Can ITC be claimed on food used for business purposes?
The registered person can claim ITC where inward supply is obtain from a registered supplier like a registered person in the course or furtherance of business. However, the tax invoice must duly be issued and supply made. Therefore, ITC is available if the supply is for any purpose in the course or furtherance of business.
Also Read: Can you claim GST ITC on travel?
GST Rates on Food and Beverage Services:
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Rates of GST on Food Items
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FAQs
If coffee and tea are packed in a packet register trademark or brand name, then GST will be applicable. In addition, the company can claim ITC, if the taxable invoice has been issued.
Yes, restaurant registered as normal tax payer are eligible to claim ITC. Furthermore, as an inward supply of goods or services are used for making an outward taxable supply.
No, ITC will not be available. Reason being that “goods or services or both used for personal consumption” will not be entitled for ITC. In addition, water comes under personal consumption. Therefore, No ITC will be available.
Conclusion
The input tax credit on food is not allowed under GST. However , if the outward supply is made under a registered brand name and put up in unit container, then it would be liable to tax.
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