GST on Business Expenses | Rate, RCM and Input Tax Credit
In this post we will be discussing about Treatment of GST on Business Expenses. All Rate, RCM and Input Tax Credit treatment etc. All the business expenses have been compiled. You can keep this post as a ready reference for all your Expense bookings and accounting treatments.
Treatment of GST on Business Expenses:
|Nature of Expense||Rate of Tax||Whether regd
will levy tax
Charge (If supply is unregd supplier)
|Salary, Wages and Bonus paid to employee||0%||No||No||No|
|Water Charges/Plain Water||0%||No||No||No|
|Registration Fees (ROF/ROC etc.)||0%||No||No||No|
|Labour Welfare Contribution to Government||0%||No||No||No|
|Fine & Penalties||0%||No||No||No|
|Conveyance Expenses – Non AC Taxi, Auto, Bus, Train||0%||No||No||No|
|Rent paid for residential use||0%||No||No||No|
|Newspapers & Magazines||0%||No||No||No|
|Remuneration to Directors and Others||0%||No||No||No|
|Conveyance Expenses – Radio Taxi like Ola, Uber or other AC Vehicles||5%||Yes||Yes||Yes|
|Payment to Goods Transport Agency||5%||No||Yes||Yes|
|Travelling in Train by AC or First Class||5%||Yes||Yes||No|
|Job Work/Labour Charges for textile yearn and textile fabrics||5%||Yes||Yes||Yes|
|Job Work/Labour Charges for diamond, jewellery and precious metal||5%||Yes||Yes||Yes|
|Job Work/Labour Charges for printing of books, journals and periodicals||5%||Yes||Yes||Yes|
|Food & Beverage Expenses (Non AC Restaurant)||12%||Yes||Yes||No|
|Room Rent in a hotel/lodge (Rs. 1,000 to Rs, 2,500)||12%||Yes||Yes||Yes|
|Fuel (Furnace Oil/LPG)||18%||Yes||Yes||Yes|
|Sales Promotion/Business Promotion||18%||Yes||Yes||Yes|
|Food & Beverage Expenses (AC Restaurent)||18%||Yes||Yes||No|
|Truck/Tempo Hire Charges||18%||Yes||Yes||Yes|
|Club & Membership Fee||18%||Yes||Yes||No|
|Advertisement Charges/Hoarding/Magazine/News Papers/Media||18%||Yes||Yes||Yes|
|Bank Charges – Service Charges recovered||18%||Yes||No||Yes|
|Broker Fee & Charges||18%||Yes||Yes||Yes|
|House Keeping Charges||18%||Yes||Yes||Yes|
|Insurance of goods and vehicles||18%||Yes||Yes||Yes|
|Payment to Advocates||18%||No||Yes||Yes|
|Loading & Unloading||18%||Yes||Yes||Yes|
|Payment to Post Office for Speed Post/Parcel||18%||No||Yes||Yes|
|Postage & Courier Charges||18%||Yes||Yes||Yes|
|Printing & Stationery (Flex Printing, Board Printing, Notice Printing)||18%||Yes||Yes||Yes|
|Rent paid for commercial use of premises||18%||Yes||Yes||Yes|
|Rent for godown for commercial purpose||18%||Yes||Yes||Yes|
|Repairs & Maintenance – Building/Electrical/P&M/ Others||18%||Yes||Yes||Note 1|
|Room rent in a hotel/lodge (Rs. 2,500 to Rs, 7,500)||18%||Yes||Yes||Yes|
|Payment for Sponsorship services||18%||Yes||Yes||No|
|Telephone, Mobile & Internet Charges||18%||Yes||No||Note 2|
|Job Work/labour charges for garment processing||18%||Yes||Yes||Yes|
|Job Work/labour charges – Others||18%||Yes||Yes||Yes|
|Sitting Fee, Commission or any other payment made to directors by the company||18%||Yes||Yes||Yes|
|Audit Fee, Account Writing, Processional Fee (Other than Advocates)||18%||Yes||Yes||Yes|
|Research & Development Expenses||18%||Yes||Yes||Yes|
|Food & Beverage Expenses (AC Restaurant)||28%||Yes||Yes||No|
|Room rent in a hotel/lodge above Rs. 7,500||28%||Yes||Yes||Yes|
|Travelling Expenses – International||28%||Yes||Yes||No|
|Amusement Park/Theatre Ticket||28%||Yes||Yes||Yes|
|Repairs & Maintenance Charges if it has not resulted into immovable property||18%/28%||Yes||Yes||Yes|
|Staff Uniform Expenses||5%/12%||Yes||Yes||Yes|
|Packing Material and Packing Charges||5%/12%/18 %||Yes||Yes||Yes|
|Plant & Machinery/ Furniture & Fixture||Actual Rate||Yes||Yes||Note 3|
|Building/ Motor Car||Actual Rate||Yes||Yes||No|
|Office Equipment including Computer, Software & Hardware||Actual Rate||Yes||Yes||Note 3|
|Free Gifts to Staff (Exempt upto Rs. 50,000 p.a.)||Actual Rate||Yes||Yes||No|
|Free Gifts to Staff (Above Rs. 50,000 p.a.)||Applicable Rate||Yes||Yes||Yes|
|Diwali/New Year Gifts purchased||Applicable Rate||Yes||Yes||Yes|
- If repair and maintenance expenses resulted into immovable property, then input credit is not allowed.
- If Telephone, Mobile & Internet Bill is in the name of the assessee and address and place of business is mentioned, then only one should claim the input credit.
- Input credit is available fully. However, if it is sold/disposed off/scrapped/thrown away within 5 years, then input credit @ 5% per quarter is availed for the used period and balance is to be reversed for not used fully at the time of date of sale/disposal.
- Input credit is available only if goods/services are used for business. If goods/services are used for personal use, then input credit is not available. If goods/services are used partially for personal use and partially for business use, then input credit is available partly in proportion to business use.
- Input credit is not available if outward supply of goods/services is exempt from payment of tax.
- As per Notification No. 8/2017 dated 28.06.2017, if the aggregate value of goods or services or both debited to Trading Account or expenses debited to Profit & Loss Account or purchase of any asset obtained from unregistered suppliers is less than Rs. 5,000/- in a day, then tax is not required to be paid for such inward supplies by the recipient for that particular day.
- Details of all purchase of goods or services debited to Trading Account or purchase of any fixed assets are required to be submitted in GST Return whether purchased from registered person or unregistered person or from composition dealer.
- However, if any expense item are purchased from unregistered supplier and escape the payment of tax in view of Notification No: 8/2017 dated 28.06.2017, then the same are not required to be submitted in GST Return.
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