ITC eligible for Leasing/Renting/hiring of Motor Vehicles for Women employees safety and security

 

In the recent case of M/s. CMA CGM Global Business Services (India) (P.) Ltd., the Tamil Nadu Authority of Advance Ruling (AAR) has provided a significant ruling regarding the eligibility of Input Tax Credit (ITC) under the Central Goods and Services Tax (CGST) Act for the transportation of women employees.

The applicant operates in the Information Technology Enabled Services (ITeS) sector, providing back-office support services. Under the Tamil Nadu Shops and Establishments Act, 1947, employers are legally required to ensure the safety and security of women employees, particularly those working late shifts between 8 PM and 6 AM. In compliance with this law, the applicant procured services for leasing, renting, or hiring motor vehicles to provide transportation for women employees. Importantly, no cost was recovered from the employees for this transportation service.

The applicant did not initially avail of ITC on the transportation services till April 2022, despite having paid GST on the services.

RULING

Yes, the applicant is eligible to avail input Services in respect of leasing/renting/hiring of motor vehicles to provide transportation facility to ensure safety and security of women employees as per Tamil Nadu Shops and Establishments Act, 1947 subject to satisfying and fulfilling the eligibility and conditions provided under Section 16 of the CGST Act, 2017.

Input tax credit shall be available to the applicant only on the tax paid on services of leasing, renting or hiring of motor vehicles for providing transport facilities to women employees alone who are arriving or leaving workplace between 8.00 P.M to 6.00 A.M.

The input tax credit on leasing, renting or hiring of motor vehicles shall be available to the applicant from 28.05.2019 onwards, however the same shall be available only on satisfying and fulfilling the eligibility and conditions provided under Section 16 of the CGST Act, 2017.