The taxman is also looking into how car dealers have calculated and claimed input tax credits on freebies offered to customers.Car dealers normally offer discounts and free products to customers when they buy cars. But they are not uniform; dealers tend to offer discounts and freebies depending on their sales.Now, experts said, dealers have been taking input tax credit on these products, which the taxman thinks shouldn’t be allowed. There is no concept of “free” under GST framework, they said.“Many automobile dealers offer various freebies, which could be goods or services, whose value is embedded in the price of the automobile,” said M S Mani, partner at Deloitte India. Transitional credit is the component of credit which was lying on the books of companies and dealers when GST was rolled out. The GST framework allows a way to set off this transitional credit against future GST liability.

Source: Economic Times May 09, 2019 17:27 UTC