Whether ITC on travelling expenses incurred by way of foreign tour incentive provided to employees for acheieving their targets allowed or not?

Reply—

Under section 17(5)(b)(iii) travel benefits extended to employees on vacation such as leave or home travel concession are also not allowed. Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide to its employees under any law for the time being in force.

Whereas, Input tax credit on accommodation in hotel and Travelling expenses is allowable if incurred for furtherance of business.

Thus, employer cannot claim ITC on expenses incurred for employee in respect of foreign tour.