No ITC on Share Buyback Expenses Unless Linked to Taxable Supply: AAR

The Authority for Advance Ruling (AAR) has ruled that Input Tax Credit (ITC) is not admissible on expenses related to share buyback, unless these expenses are directly linked to a taxable supply made by the company. The AAR reasoned that share buyback is a capital reduction exercise and the associated costs do not qualify as inputs used in the furtherance of business for making taxable outward supplies.