Recently the Maharashtra Authority for Advance Ruling (AAR) cleared out that the ITC of GST will not be available to the General Manager and Managing Director of the company in case of any hotel stay without rent.
An applicant from the POSCO group companies from the POSCO overseas entity mentioned that the important person of the group i.e. the Managing Director (MD) and General Manager (GM) are being deputed to the Indian group of companies.
The cost of accommodation for the GM & MD was in consideration of the salary of the applicant as per the provisions of Income Tax Act, 1961. Here the applicant requested for clarification whether they are eligible for ITC or not.
As per the official statement by the authority, “It is the intention of the Govt. not to tax the rent paid by any person when the rent is paid for any place of residence. In this case, if the MD/GM were staying at any residential place or society, the applicant would have paid only rent without GST. It is seen that the applicant has made various submissions supporting their contention that Input Tax Credit is admissible in respect of GST paid for the hotel stay in case of rent-free hotel accommodation provided to GM/MD of the company.
“However in view of the above discussions we find that the Hotel Accommodation is being used by the applicant as a residential premises of their MD/GM which is for the personal comfort of both and therefore in view of the provisions of Section 17(5)(g) we hold that they are not eligible to claim the ITC for the same,.”