Blocked GST Credit on Motor Vehicles w.e.f. 1st February, 2019

Vide notification no. 02/2019-Central Tax dated 29th January, 2019, the Central Goods and Service Tax (Amendment) Act, 2018 has been made effective from 1^st February, 2019. With the said introduction, various provisions of the CGST Act, 2017 has under gone amendments and one of such amendment relates to blocked credit on motor vehicles which have been taken up in the present article.

EARLIER PROVISIONS RELATING TO BLOCKED CREDIT ON MOTOR VEHICLES –

INPUT TAX CREDIT NOT AVAILABLE –

The input tax credit in respect of motor vehicles and other conveyance is not available.

EXCEPTIONS –

Following are the list of exceptions in case of the non-availability of the input tax credit in respect of motor vehicles and other conveyances i.e. input tax credit in respect of following is available –

• Motor vehicles and other conveyances when used for providing following taxable supplies –
  • A further supply of such vehicles / conveyances; or
  • Transportation of passengers; or
  • Imparting training on driving, navigating or flying such vehicles or conveyances.
• Motor vehicles and other conveyances when used for the transportation of goods.

AMENDED PROVISIONS RELATING TO BLOCKED CREDIT ON MOTOR VEHICLES –

1. INPUT TAX CREDIT IN RESPECT OF THE MOTOR VEHICLES –

INPUT TAX CREDIT NOT AVAILABLE –

The input tax credit in respect of the motor vehicles for transportation of the persons having an approved seating capacity of not more than 13 persons, which includes the driver.

EXCEPTION –

Following are the list of exceptions in case of blocked credit in respect of motor vehicles for transportation of persons having approved seating capacity of not more than 13 persons i.e. input tax credit is available when it used for providing following taxable supplies i.e. –

• A further supply of such motor vehicles; or
• Transportation of passengers; or
• Imparting training on driving such motor vehicle.

2. INPUT TAX CREDIT IN RESPECT OF VESSELS AND AIRCRAFT –

INPUT TAX CREDIT NOT AVAILABLE –

Input tax credit not available in respect of vessels and aircraft.

EXCEPTIONS –

Following is the list of exception in case of blocked credit in respect of vessels and aircraft i.e. the input tax credit is available in the following case –

• Vessels and aircraft when used for providing following taxable supplies –
  • A further supply of such vessels / aircraft; or
  • Transportation of passengers; or
  • Imparting training on navigating such vessels; or
  • Imparting training on flying such aircraft.
• Vessels and aircraft when used for the transportation of goods.

3. INPUT TAX CREDIT IN RESPECT OF SERVICES OF GENERAL INSURANCE, SERVICING, REPAIR AND MAINTENANCE OF MOTOR VEHICLES, VESSELS OR AIRCRAFT

INPUT TAX CREDIT NOT AVAILABLE –

The input tax credit is not available in respect of services of general insurance, servicing, repair and maintenance of motor vehicles, vessels or aircraft.

EXCEPTIONS –

Following is the list of exception i.e. input tax credit is available in respect of the services of general insurance, servicing, repair and maintenance in the following situation –

• When the motor vehicles, aircraft or vessels are used for following specified purpose –
  • A further supply of such motor vehicles, vessels or aircraft;
  • Transportation of passengers;
  • Imparting training on driving, navigating and flying of motor vehicles, vessels and aircraft, respectively;
  • For the transportation of goods.
• When the taxable person is engaged in –
  • The manufacturer of such motor vehicles, aircraft or vessels; or
  • In the supply of general insurance services in respect of such motor vehicle, vessels or aircraft insured by him.

4. INPUT TAX CREDIT IN RESPECT OF LEASING, RENTING OR HIRING OF MOTOR VEHICLES, VESSELS OR AIRCRAFT

The input tax credit in respect of leasing, renting or hiring of motor vehicles, vessels or aircraft is not available, however, the input tax credit is available only when the motor vehicles, vessels or aircraft are used for following specified purpose –

• A further supply of such motor vehicles, vessels or aircraft;
• Transportation of passengers;
• Imparting training on driving, navigating and flying of motor vehicles, vessels and aircraft, respectively;
• For the transportation of goods.