This is an updation of my earlier article on the same matter wherein  issue of availability of Input Tax Credit (ITC)  in respect of  services of repairs, insurance etc. for   motor vehicles has been discussed.

Through CGST Amendment Act 2018, the law on this point has been amended by inserting clause (ab) to Sec. 17(5) to specifically deal with the matter . The meaning and purport of this new clause is that ITC in respect of services of general insurance, servicing, repair and maintenance related to a motor vehicle is now specifically in the blocked credit category, if such motor vehicle is –

  • for transportation of persons and
  • having approved seating capacity of not more than thirteen persons (including the driver).

Accordingly now, for example, in respect of a car, even though purchased for business purposes, ITC on its insurance, repairs etc. can not be claimed post applicability of 2018 amendment act.

It merits mentioning here that the amendment act has been made applicable w.e.f. 01/02/2019. The above mentioned newly inserted clause 17(5)(ab) has not been given retrospective effect as has been done with certain other sections of the principal act . The prospective applicability of the clause implies that, due to absence of any such restriction in the pre amendment law, ITC on repairs etc. of all types of motor vehicle, upto 31/01/2019, was NOT in the blocked credit category. It is only from 01/02/2019 onwards, the restriction on such ITC comes into play.

Cases where ITC on motor vehicle repairing/ insurance services is available even after amendment

A careful reading of amended law gives us following situations where ITC on repairing/ insurance services of motor vehicle is still available (subject to, of course, fulfillment of other basic conditions for availment of any ITC) :

1. Motor Vehicle for transportation of persons having approved seating capacity of more than 13 persons. ( e.g. A Bus)

2. Motor Vehicle for transportation of goods. ( e.g. A Truck)

3. Motor Vehicle used for making following taxable supplies, namely:—

(A) further supply of such motor vehicles ( e.g. In case of a Car Dealer)

(B) transportation of passengers (( e.g. In case of a Taxi Service Provider)

(C) imparting training on driving such motor vehicles ( e.g. In case of a Driving School)

4. Services received by a taxable person engaged—

(I) in the manufacture of such motor vehicles

(II) in the supply of general insurance services in respect of such motor vehicles insured by him;

Thus in all other cases apart from above 4, Input Tax Credit in respect of repairs/ insurance of motor vehicle is not available on and after 01/02/2019.

(Republished with amendments)

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19 Comments

  1. k k agrawal says:

    ours is a private ltd manufacturing company since 1990 and were covered under central excise & service tax regime till 01/07/2018. Last week the Departmental audit team audited our records for FY2016-17 and First Quarter of FY2017-18 i.e. up to 30/06/2017. They say that ITC availed on insurance premium payment of company owned cars used by Directors has to be reversed wid intt.

  2. Sahil kumar says:

    I am industrial gas supplier and I am using our own goods carring vehicles for gas supply to consumer. So can I take input credit for maintenance of goods carring vehicles.

  3. Gourav diwakar says:

    I have paid freight charges for personal car transportation from Ludhiana to delhi for repair purpose because repair Dealer is in Delhi so kindly Guide me Whether GST input is available on transporter bill Or not available?

  4. SWADESH MANNA says:

    I have a Dumper Hire charges for cargo handling service to GTA, which is exampled service.
    I have purchase some tyre, can I claim ITC

  5. NARESH says:

    (II) in the supply of general insurance services in respect of such motor vehicles insured by him

    Will it apply that insurance company can now claim ITC for repairs of vehicle insured by them for their liability under insurance contract part

  6. mdafria says:

    As the amendment act has been made applicable w.e.f. 01/02/2019, the changed scenario shall come into picture only from this date and not from 30/08/2018. ITC on vehicle repairs etc. upto 31/01/2019 can be claimed as per my previous article.

  7. CA Dipesh Gundesha says:

    Whether “CGST Amendment Act 2018” is notified? If not how cut-off date of 30/08/2018 is determined. Why not ITC on vehicle repairs be taken till now?

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