Strategy is a clear plan of action designed to use limited resources, handle uncertainty, and achieve a specific long-term goal.
The above meaning of strategy is taken from Google.
The government is practising this concept of ‘strategy’ wisely. The GST council already has a list of issues and suggestions received from various industries, tax practitioners association, tax payers etc. from time to time. But which issue to be touched upon , when and how to solve it, whether in favour of tax payers or otherwise is completely at the discretion of the govt.
Free samples
Pharma industries have been for long asking for the clarity on the eligibility of input tax credit on the free samples given to doctors. Also on the stock which is required to be destroyed after expiry date.
Pharma industries were emphasising that free samples distribution to the Doctors is an essential part of the business. This brings awareness of the product and increases sales. Though it is given free i.e without consideration but still there is a hidden obligation on the part of the doctor to prescribe the said pharma product to its patient. In a way it is a marketing expense. Hence , input tax credit should be allowed.
However, the department and honourable High court has taken different stands and clarified that the physician samples given to doctor is free and has no consideration and hence it is covered under the blocked input tax credit section Section 17(5)(h) which restricts ITC on free samples.
In the recent GST Council meeting which is the 57th meeting, the GST Council has recommended that input tax credit shall be allowed on free samples. This is a welcome step taken by the government in favour of the taxpayer.
This is a gift much before the Diwali festival. Wow ! A long pending issue of input tax credit eligibility on free samples is put to rest now. A huge input tax credit reversed by the pharma company on free samples since GST month on month will no more be required from the effective date of this provision.
Input tax credit can very well be claimed on free samples distribution. It will continue to dispatch through Delivery challan and e-way bill.
Life and health insurance
In the last GST council meeting GST was made exempt on individual life and health insurance attempting to give affordable insurance coverage to the common man.
Group life and health insurance which normally a corporate office buys for its employees continued to be taxable. However, input tax credit on the GST paid on premium was not allowed in terms of section 17(5). This has added to the cost of the company.
Now, in the 57th GST council meeting, the government has removed the restriction on the claim of input tax credit on life and health insurance .
Hence, with the effective date to be notified, the tax payer can claim ITC on the GST paid on the group life and health insurance.
Individual life and health insurance continue to be exempt.
This is a welcome move from the government side. Never expected such relief from the Government especially when the government is in need of funds. ITC would minimize the GST collection. But still it has allowed ITC on said insurance.
The current govt strategy is to keep the tax payers happy. It has removed 12% tax rate last year and now allowrd ITC on life and health insurances, outdoor catering, telecom tower, pipeline laid outside factory premises.
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