Abstract

In an initiative to fulfill the obligations to the society, Companies are mandated to carry out Corporate Social Responsibility activities under the Company Act, 2013. CSR enables firms of all sizes to implement beneficial transformations. A significant portion of the costs associated with CSR projects are subject to GST. There has been a persistent dispute about the eligibility of ITC for costs incurred by companies to fulfil their CSR commitments. The discussion over the tax deductibility of costs related to CSR has been ongoing since before the implementation of the GST, and it persists under the current GST system. The Finance Act, 2023 has put an end to the controversy on eligibility of ITC over CSR expenditure. By introducing Section 17(5)(fa) to the CGST Act, it completely blocked the availment of credit prospectively. In this premise, the author evaluates the challenges with regard to ITC on CSR expenses, consequent to the amendment prospectively. Since it is prospective, what happens to the past?

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