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Partial recovery of Mobile phone from employee-GST Input, Goods and Services Tax - GST

Issue Id: - 116839
Dated: 10-11-2020
Partial recovery of Mobile phone from employee-GST Input

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Dear sirs,

As per policy of one of our clients, they provide mobile phone to employees as per their pay scale. For example, Scale A employees are allowed phones upto ₹ 10,000/-. If employee intends to purchase more expensive mobile, say for ₹ 15000, then balance of 5,000/- is recovered from him.

Now in effect, mobile is capitalised by 10,000/- in books but GST ITC is taken on entire invoice value of 15000. Whether this is correct or instead recovery of 5000/- should be treated as sale and corresponding ITC reversed?

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Showing Replies 1 to 2 of 2 Records

1 Dated: 10-11-2020
By:- Rajagopalan Ranganathan


Since you are recovering ₹ 5000/- from your employee for all practical purpose the consideration in excess of 10000/- is paid by the employee. Therefore ITC of gst paid on ₹ 5000 belongs to the employee. Therefore you have to reverse the ITC of gst paid on 5000/-.

The moot question is whether you recover ₹ 5000/- along with gst paid on such amount or not.

2 Dated: 10-11-2020
By:- Ganeshan Kalyani

Sir, if the asset is capitalised with GST then ITC cannot be taken.


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