GST EXEMPTION ON GOODS SUPPLIED TO FLOOD HIT KERALA
“India stands with Kerala, in this hour of need. Central Government is exempting basic custom duty and IGST for the consignments of aid and relief materials being dispatched or imported from abroad for the affected people” tweeted by the Finance Minister Piyush Goyal.
The Central Government has exempted the basic custom duty and IGST on goods supplied to Kerala. Exemption given is applicable till 31st December 2018. It’s welcome step taken by the Central Government.
Whether ITC on such goods needs to be reversed?
The answer is Yes. According to section 17(5), ITC is not allowed on goods lost, stolen, destroyed, written off, or disposed by way of gift or free samples. This means ITC needs to be reversed on free supplies.
What about the goods damaged in the floods?
As mentioned above, ITC on goods destroyed or damaged is not allowed as it is covered under blocked credit.
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