If you want to claim gst than only way is to capitalise it and than proportionate credit in ratio of 70:30 or 90:10 can be done
Buying an iPhone for Director
I am a director of a private limited company that are in the business of blogging. We typically do our work using desktop, but still use mobile every now and then, since 70% of our visitors are using mobile phones. But if personal-work usage ratio is taken, that would be more like 90-10. In such a case, what's the best way to purchase a gadget for the usage of director, without breaking any law, using company's funds? Showing the whole phone budget as business expense is the simplest solution, but then the personal usage factor comes in. Is there a way to buy the phone by showing the gadget in "gadget reimbursement" or as a perquisite for the director in the salary? If perquisite, is there a possibility to show only 10% of the phones value as taxable in the hands of director? Or is there any other way around this? Also, what about claiming GST in either of the cases? Thank you.
Asked 2 years ago in Income Tax
Dear Sir,
In reference to your query, you may be able to charge the entire amount as an expense, considering that in the current scenario mobiles are usually not carried for more than a couple years.
The need for classification of use also can be avoided and be charged to business in its entirety.
In relation to GST, in either scenario, i.e. if the said item is expensed or capitalized, entire ITC would be available immediately on use.
However in case the asset is disposed off, then corresponding tax would be payable at the resale value, and further in case of capitalization proportionate reversal would arise.
Please connect in case of any further clarifications.
Thanks & Regards,
CA Aditya Dhanuka.
Showing 90-10% ration can be shown in proprietorship business, however it is not possible to show it in case of company.
However, company can purchase mobile and give it to the director as perquisite however it can attract many issues such as ITC claim under GST, depreciation etc. Hence, you have 2 options:
1. Give the money to director and let them buy mobile.
2. Purchase mobile and show it as business asset only.
Hope you find the information helpful, if yes do rate if 5 and provide your valuable feedback for my improvement.
Thank you.
- You should consider it as a capital expenditure. If it is sold before the useful life then ITC would be reversed proportionately on the remaining useful life. You can disallow depreciation upto 20% (for personal use) at the time of filing of ITR. Claim ITC proportionately.
For detailed discussion you may opt for phone consultation
Hi
Phones can be purchased for directors from company's accounts. It would be capitalised as a fixed asset and depreciation would be allowed. ITC can be claimed by the company for the GST paid.
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