Question26: XYZ Ltd. had purchased gold on which ITC was not availed. The same was distributed as diwali gift to employees but since per person amount was Rs.12000 no GST was paid on it. But XYZ is availing ITC on common services such as telephone, courier etc. In that situation are they required to reverse ITC on common services as per Rule 42 of CGST Rules against the above free gifts distributed'

Answer: Credit of ITC will required to be reversed because the inputs are not used to provide taxable supply. Common inputs and services are to be checked .you have to make a list of services used for common purposes please note that number of services like godown rent and its security, courier charges etc will not be covered under this category. (Reply dt. 11/12/2017)