Question95:
Can company claim ITC on Indoor catering service to its employee And on
Insurance of Workman Compensation'
Answer
The ITC on some items is blocked/disallowed through Section 17 (5)
Section 17(5) contains as follow
b) the following supply of goods or services or both:'
(i) food and beverages, outdoor catering, beauty treatment, health services,
cosmetic and plastic surgery except where an inward supply of goods or services
or both 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 or as
an element of a taxable composite or mixed supply
(ii)_________________________________________________
(iii) rent-a-cab, life insurance and health insurance except where
''
(A) the Government notifies the services which are obligatory for an employer
to provide to its employees under any law for the time being in force; or
(B) such inward supply of goods or services or both 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 or as part of a taxable composite or mixed
supply; and
(iv) _____________________________________________________________
Thus the ITC of catering service and Insurance of workman compensation( except
when provided under any law in force) are disallowed.
Now there are two possibilities of catering service as follow
Case 1 :- The confusion in your question is created .because of use of word
indoor catering . Section 17(5) block credit of outdoor catering . Your
attention is invited to the definition of "Outdoor caterer " as follows:-
"Outdoor caterer' means a caterer engaged in providing services in connection
with catering at a place other than his own but including a place provided by
way of tenancy or otherwise by the person receiving such services"
According to above definition if the caterer is operating in your company then
he is also covered under category of outdoor caterer.
Case 2:- In case you are procuring various ingredients yourself & your staff is
engaged in preparation of food then you can claim credit on purchase of Input/
input Services of catering provided you are charging tax on food supplied to the
employees. (Reply dt. 18/4/2018)