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Under GST, firms can get input tax credit for official air travel of staff

Amit Bhagat / 09 Oct 17 | 09:14 AM

GST. Illustration: Ajay Mohanty

Individual A, who is based in Mumbai, owns property in Delhi and Kolkata. He enters into rent agreements from Mumbai for both the properties. Is this interstate or intrastate transaction? Where should the landlord register himself?

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Amit Bhagat

A person having an annual aggregate turnover of less than Rs 20 lakh on an all-India basis is not required to obtain goods and services tax (GST) registration. If the supplier is providing interstate services, this threshold should not be applicable and the supplier has to mandatorily register.

In renting of immovable property, the government has said registration is required only in the state from where the services are supplied. We understand the landlord is based out of Mumbai and does not have any presence in Delhi or Kolkata. As the landlord is only present in Mumbai, he can be said to be supplying the services from there. Therefore, such landlord can be said to be providing interstate services from Mumbai. He should, therefore, be required to register in Maharashtra.

Our company deals in leather products and is operating from Delhi and Hyderabad. Employees travel between the two cities. The company bears expenses for air travel. Can the company avail of the input tax credit for the expenses on air travel?

Under GST law, taxes paid on procurement of goods or services used in the course or furtherance of business are eligible as input tax credit, unless specifically restricted.

The air travel expenses incurred for travelling of employees between Delhi and Hyderabad are for official or business purposes and not for personal use of the employees. The company should, therefore, be eligible to avail of the input tax credit, subject to receipt of valid tax invoice containing the prescribed particulars. The invoice raised by the airline or travel agents should contain all the prescribed particulars, including name and registration number of the company.

Is it possible to obtain a GST registration certificate for a limited period?

A supplier of goods or services having an annual aggregate turnover of Rs 20 lakh (on a pan-India basis) during a financial year has to obtain GST registration (for specified north-eastern states, this threshold limit is Rs 10 lakh). Such registration has been granted indefinitely to the supplier, unless ceasing to supply the goods or services.

In the case of ‘casual taxable person’ or ‘non-resident taxable person’, GST law prescribes that registration shall be granted for a limited period to undertake compliance. Further, such registration shall be valid for a period specified in the application for registration or 90 days from effective date of registration, whichever is earlier.

I am a chartered accountant who provides consultancy to clients in different parts of the country. My turnover from these services in the preceding financial year amounts to Rs 45 lakh. Am I required to mention the HSN (harmonised system of nomenclature) code on the invoices raised? If yes, up to how many digits?

It depends upon annual turnover of the registered taxable person in the preceding financial year. According to the notification issued by the government, a registered taxable person having annual turnover up to Rs 1.5 crore is not required to mention the code on the invoice. In your case, as turnover in the preceding financial year did not exceed Rs 1.5 crore, you are not required to mention the code. The writer is tax partner, PwC India. Aditya Khanna, associate director, PwC contributed to this column. The views expressed are experts’ own. Send your queries to yourmoney@bsmail.in

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