Year 2020 has become a dooming year when the whole world is fighting against COVID-19. Declaration by the World Health Organisation (WHO) as a pandemic has heightened the attention of the world on the serious consequences of the disease. This has compelled the governments at various levels to undertake necessary preventive and relief measures. The government has invoked its powers under various laws and has enacted advisories with respect to curtailing the COVID-19 situation.

• The Epidemic Diseases Act, 1897
• The Disaster Management Act, 2005
• Advisories like COVID-19 Regulations, 2020 issued by the Ministry of Home Affairs

These guidelines relate to restarting the business operations and taking measures to prevent the spread of the virus amongst employees. The guidelines further mention that any person found violating the regulations shall be deemed to have committed an offence punishable under the Indian Penal Code.

Considering the above, businesses are mandated to incur additional expenses for the safety and welfare of the employees as well as hygiene of the premises resulting in additional cash outflow. An illustrative list of expenses are:

• Expenditure on sanitizing the premises like sanitisers, disinfectants
• Safety tools like PPE kits, masks, medical facility
• Medical insurance
• Food and accommodation

Now the million-dollar question is whether the input tax credit on such expenses can be claimed under GST or whether it falls under the category of ineligible expenses under the law. The conditions for claiming input tax credit (ITC) are mentioned under section 16(1) of the Goods and Services Tax, 2017 subject to restrictions mentioned in section 17(5) of the Act:

• Possession of a tax invoice
• Receipt of goods / services
• Actual payment of taxes to the government
• Filing of return u/s. 39

Section 17(5) of the Goods and Services Tax, 2017 places restrictions on the availment of ITC with respect to

• Food and beverages, outdoor catering, beauty treatment, health services……..

provided that ITC will be allowed in case the employer is obligated to provide to its employees under any law for the time being in force

• Goods or services used for personal consumption

As the government has issued various guidelines, the incurrence of such expenses is not routine in nature but are done out of mandate. These expenses are for the safety and welfare of the employees which may appear to be personal in nature, however in substance such expenses are necessary for the continued operations of the business and cannot be ignored. Since the situation has been declared as an epidemic under the various statutes and guidelines, the expenses incurred would be considered as an statutory obligation instead of voluntary care and welfare.

In conclusion, the availment of ITC related to COVID-9 expenses is tabulated below:

Sl. No.	Expense	Eligibility in circumstances other than COVID-19 pandemic	Eligibility in circumstances of COVID-19 pandemic
1.	Expense related to sanitizing business premises	No (if used for personal consumption)	Yes
2.	Expenses related to masks, PPE kits and other safety equipment for employees	No	Yes
3.	Medical insurance	No	Yes
4.	Food and beverages	No	Yes
5.	Accommodation like guest houses	No (if used for personal consumption)	Yes (for specified industries)

Conclusion: Businesses are advised to carefully examine the eligibility of claiming input tax credit on expenses which was previously not allowed and have been allowed in the present considering the situation as the Revenue may take adverse view and challenge the credits.