Summary: The Tamil Nadu Authority for Advance Rulings (AAR) in the case of Access Healthcare Services Private Limited (Advance Ruling No. 10/ARA/2024, dated May 30, 2024) ruled that Input Tax Credit (ITC) can be claimed on contract staffing services, provided the conditions under Section 16(1) of the Central Goods and Services Tax Act (CGST Act) are met. The applicant, engaged in providing Information Technology (IT) and IT-enabled services (ITeS) to the healthcare sector, faced challenges in sourcing and retaining suitable human resources due to a volatile job market. To address this, they considered hiring professional contract-staffing firms that would issue tax invoices with applicable GST. The AAR confirmed that the applicant fulfilled the requirements of Section 16(1) and Section 16(2) of the CGST Act, including possession of tax invoices, receipt of services, tax payment to the government, and filing of returns. Additionally, the AAR noted that ITC on contract staffing services is not restricted under Section 17(5) of the CGST Act, which specifies categories where ITC is unavailable. Since the services do not fall under any of the conditions in Section 17(5), the ITC on these services is not blocked. Thus, the applicant is eligible to avail ITC on contract staffing services as per Section 16(1) of the CGST Act.
Introduction: The Tamil Nadu AAR, in case of In re., Access Healthcare Services Private Limited [Advance Ruling No. 10/ARA/2024 dated May 30, 2024], ruled that Input Tax Credit (“ITC”) can be availed on the contract staffing services received, subject to the condition specified in section 16(1) the Central Goods and Services tax Act (“the CGST Act”). The AAR also confirmed that ITC on contract staffing services is not blocked under Section 17(5) of the CGST Act.
Facts:
M/s. Access Healthcare Services Private Ltd. (“the Applicant”), was engaged in providing Information Technology (IT) and Information Technology Enabled Services (ITeS) for the healthcare sector. The Applicant was also engaged in business process outsourcing, application services and robotic process automation tools to the healthcare providers, payers, and related service providers.
Due to the volatile job market, it was difficult to identify, train and retrain suitable resources. The Applicant was considering hiring professional contract-staffing firms for human resource management and related services. Such firms would issue tax invoices on the Applicant towards the services rendered, along with applicable GST.
Hence, the Applicant preferred for advance ruling regarding the eligibility to claim ITC on these contract staffing services.
Issue:
Whether ITC is eligible on contract staffing services received by the healthcare sector?
Held:
The AAR, Tamil Nadu in Advance Ruling No. 10/ARA/2024 held as under:
- Observed that, the Applicant fulfilled all the conditions of the Section 16(1) of the CGST and Section 16(2) of the CGST Act, including possession of tax invoices, receipt of services, payment of tax to the government, and filing returns for claiming the ITC.
- Further noted that, the ITC on contract staffing services is not blocked under Section 17(5) of the CGST Act, which lists specific categories where ITC is not available. Further, the GST paid by the Applicant on availing contract staffing services is not a blocked credit as per Section 17(5)(b) of the CGST Act because as much as the transaction under question does not fall under any of the conditions of Section 17(5) of the CGST Act, availment of ITC on the transaction under question is not blocked under the Section 17(5) of the CGST Act.
- Held that, the Applicant eligible to avail ITC on contract staffing services received under Section 16(1) of the CGST Act, subject to the fulfilment of conditions specified in the said section.
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