Authorised car dealers can claim input tax credit on demo cars: WB AAR

 

In a recent ruling that impacts automobile dealers across India, the West Bengal bench of the GST Authority for Advance Ruling (AAR) has provided clarity on the taxation aspects of demonstration cars, commonly known as demo cars.

 The AAR clarified, “The applicant is entitled to claim input tax credit charged and paid on inward supply of car which are used for demonstration purpose and supplied further after a specified time period.”

 The ruling was in response to an application filed by Landmark Cars East Pvt. Ltd, an authorized dealer of Mercedes-Benz, seeking a clarification on whether it was entitled to claim ITC charged and paid on the inward supply of cars from Mercedes-Benz India, used for demonstration purposes.

 Regarding the tax rate applicable upon the sale of a demo car, the AAR stated that “its outward supply would attract the same rate of tax as its inward supply.” Cars are currently subject to a 28% GST, in addition to applicable cess, upon sale.

The copy of the order is as under:

in-re-landmark-cars-east-private-limited-gst-aar-west-bengal (1) (1)