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The issue at hand is as to whether the Input Tax Credit (ITC) under GST is available in respect of inputs/input services required for the purpose of Corporate Social Responsibility (CSR) undertaken by a corporate.


After having gone through the relevant provisions of the GST Act the opinion of availability of ITC on CSR Activities is opined as follows:

The term “ input” and “input services” are defined under Section 2(59) of the CGST Act 2017 and Section 2(60) of the said Act respectively. As per these definitions, inputs/input services are those goods or services which are used or intended to be used in the course or furtherance of business. In the present context, the term “furtherance of business” assumes a lot of significance. The CSR activity is undertaken by a corporate and it is provided without consideration. Such an activity, undertaken without consideration, is outside the scope of definition of “supply”, if it is seen in isolation.

It has to be ascertained whether CSR is to be considered an activity in isolation or CSR is an activity related to the main activities of the corporate. Let us understand this by way of an illustration. Supposing, there is a corporate having turnover of Rs. 1000 Crores the profit @10% is Rs. 100 Crores. The amount required to be spent towards CSR is Rs. 2 Crore [2% of Rs. 100 Crore]. While spending this amount of Rs. 2 Crore, certain GST is paid on input / input services required for performing CSR.

In normal course of business if there is an output supply on which GST is payable and such GST can be paid by utilizing the ITC so available. However, in case of CSR where there is no output liability of GST since no money is to be received the ITC available in providing the CSR activity cannot be utilized. This is a situation where CSR is seen in isolation and it can be opined that ITC towards CSR is not available.

Albeit, if the issue is examined in totality and it cannot be overlooked particularly because the amount spent towards CSR is directly related to the turnover of the corporate in other words it is related to the turnover generated from the overall business activities.

There was a judgment by Hon’ble Bombay Tribunal in case of Essel Propack Ltd. vs. Commissioner of CGST which relates to service tax period from October 2009 to November 2010. The Hon’ble Tribunal allowed the CENVAT credit holding that CSR is one of the activities “relating to business”. The Tribunal considered it a part of business [if not seen in isolation]. It may be added that the definition of input service in CENVAT credit Rules, at the relevant time covered the “activities relating to business” in inclusive part but w.e.f. 01-04-2011, this was deliberately deleted and the words “relating to business” were no longer there. Since the period involved in the aforesaid judgment was prior to 01-04-2011, the “activities relating to business” was made the basis, which was quite justifiable. Had it pertained to period after 01-04-2011, the judgment might have been the other way around.

Now, comparing the words prior to 01-04-2011 in definition of input service and the words under GST, it may be seen that there is a similarity. Earlier it was “activities relating to business” and now it is “in furtherance of business”. Seen from this angle, one can safely say that the ratio of aforesaid judgment can be relied upon to opine that the ITC in respect of CSR is available under GST.


ITC in respect of CSR under GST is admissible, as discussed above, when seen in totality of the business of the corporate, which is the only correct logical conclusion. The department’s denial of ITC can only be possible, if CSR activities are seen in isolation. However, there is a possibility of litigation by the GST Department on this issue, but eventually in our considered opinion, the issue will be decided in favour of the assessee.