ITC on Motor Vehicle & GST




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ITC on Motor Vehicle & GST

 

Author

Udaya Chandran

uday.gstguide@gmail.com

 

 

Section 17(5) of CGST Act denies input tax credit on the specific supplies received by a registered person.  Input tax credit on motor vehicles used for transportation of persons is ineligible.  We shall discuss the same in detail.

According to Section 17(5) (a) of CGST Act, input tax credit is not available on motor vehicles used for transportation of persons having approved seating capacity of less than thirteen persons, this includes the seat of the driver.

At the same time, if such motor vehicles are used for making the following taxable supplies, input tax credit is available:

  1. Further supply of such motor vehicles – the registered person is in the business of selling such motor vehicles
  2. Transportation of passengers – the registered person is in the business of transport services of passengers
  3. Imparting training on driving such motor vehicles – the registered person is in the business of providing training on driving by using such motor vehicles

Also Section 17(5) (ab) of CGST Act, denies input tax credit on the services of general insurance, servicing, repair and maintenance for the motor vehicles having seating capacity of less than thirteen.

At the same time input tax credit is available on the services related to motor vehicle insurance, repair and maintenance of such vehicles if they are used for the purposes mentioned in the Points A, B & C as above.

Apart from the points A, B & C above, ITC is available on the services of general insurance, servicing, repair and maintenance as received by a taxable person engaged in the manufacture of such motor vehicles or who is involved in the supply of general insurance services in respect of such motor vehicles.

ITC on Motor Vehicles used for transportation of goods

ITC on Motor vehicles used for transportation of goods in the business is available and ITC on the services of general insurance, servicing, repair and maintenance for such vehicles is also available.

CGST Act denies ITC on motor vehicles only on those mentioned in the Section 17(5) (a) with some inclusions and exclusions as discussed above, otherwise there is no restriction on availing ITC on other motor vehicles when they are used for business purposes.

Summary

  1. ITC is not available on motor vehicles used for transportation of persons having seating capacity of less than 13 including driver’s seat
  2. ITC is not available on the services of general insurance, servicing, repair and maintenance on motor vehicles used for transportation of persons having seating capacity of less than 13 including driver’s seat
  3. ITC is available to the registered persons who further supplies such motor vehicles having seating capacity less than 13
  4. ITC is available to the registered persons who is involved in the business of transportation of passengers even if such motor vehicles having seating capacity less than 13
  5. ITC is available to the registered persons who provides training on driving on motor vehicles having seating capacity of less than 13
  6. ITC is available on services of general insurance, servicing, repair and maintenance on motor vehicles having seating capacity less than 13 as long as they are used for providing the supplies as mentioned in Points No.3, 4 & 5 above and to those who are involved in the manufacture of such vehicles and are in the business of providing general insurance services for such motor vehicles
  7. ITC available on motor vehicles used for transportation of goods
  8. ITC available on the services of general insurance, servicing, repair and maintenance of motor vehicles used for transportation of goods

Disclaimer: This article is only for the purpose of understanding the provisions of the Act, The author bears no responsibility on decisions taken by the readers whatsoever.  E&OE.




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