The Telangana AAR in the matter of M/s. Sai Silks Kalamandir Limited [A.R.Com/21/2024, TS AAR Order No. 10/2026 dated September 18, 2026] ruled that Input Tax Credit (“ITC”) on expenses incurred in the course of an Initial Public Offering (“IPO”) relating to the fresh issue of shares is eligible to be claimed when the net proceeds are utilised for furtherance of business, as such expenses have an indirect but substantial nexus with the business and are not blocked under Section 17(5) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”). However, ITC on the portion of expenses relating to the Offer for Sale (“OFS”) by existing shareholders is not eligible, as the proceeds thereof do not accrue to the company.
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