To understand this point lets read the law as below:-
As per Section 17(5) of CGST Act Input tax credit shall not be available in respect of the following, namely:—
motor vehicles and other conveyances except when they are used–
(i) for making the following taxable supplies, namely:—
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
Now the point is whether Bike and Scooty cover in “motor vehicle” or not?
As per Section 2(76) of CGST ACT :- “motor vehicle” shall have the same meaning as assigned to it in clause (28) of section 2 of the Motor Vehicles Act, 1988;
As per clause (28) of section 2 of the Motor Vehicles Act, 1988:- “motor vehicle” or “vehicle” means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding twenty-five cubic centimeters
Here cubic centimeters mean CC engine capacity, Hence Bike and scooty having engine capacity more than specified limit will be covered in motor vehicle and ITC will be not eligible as per section 17(5) CGST ACT.
Further , GST Amendment Act 2018 applicable with effect from 01 Feb 2019 states that ITC under 17(5) will be blocked for Motor vehicles for transportation of persons having approved seating capacity of not more than 13 persons.
Earlier ITC was prohibited for all motor vehicles and now seating capacity criteria has been inserted in new clause. Bikes are any way are having sitting capacity of less than 13 person .
Hence , it is cleared that ITC is not eligible on purchase of Bikes unless it is used for specific purposes as mentioned in Para 2 above .
CA UMANG GARG – [email protected]
(Article is republished with amendments by Taxguru Team & CA Anita Bhadra)
Author Bio
ITC Fine
I TWO WHEEL BIKE PURCHASE FOR COMMERCIAL PURPOSE ITC CLIAM OR NOT
Can we take benefit of GST of Bicycle used for office use.
I have purchased Electric scooty for my personal use, may i eligilble to claim such ITC ?
I have purchased bike for my service team for providing services to our customers. Am i eligible for ITC
Motor Vehicle for Transportation of Persons is ineligible. Further, bike generally falls in definition of motor vehicle, however if it is not for transportation of person its out of ineligibility and credit would be clearly eligible.
i have purchase activa scooter in partnership firm (Printing Press) for delivery of Goods like Letter Pads Invoice, what gst input credit in firm
what about Electric Scooter ? it dose not have CC capacity at all. can i claim the credit of electric scooter ?
Further the Scooty should has more than four wheels and CC above 26
There is no need to read much into the M.V.Act. The ITC would be available if Sccoty is
(i) used for
(A) further supplied, I.e on receipt from O.E manufacturer, the dealer can take credit and utilise the credit while supply to Customer or another Dealer
(B) used for transportation of passengers I.e as a scooter taxi, and the service provider being registered
(C)used for imparting training, I.e by a Driving Institute imparting training for driver’s license and the institute is registered.
(ii) used for transportation of goods I.e the transporter has to be registered, the service being supply for transportation of goods by road
As per my understanding ITC can be claimed as scooty have less than four wheels
One more exception for ineligibility is that if the two wheeler is used as two wheeeler cab (once upon a time this concept was in existence for a short period), then ITC can be availed. Is it not?
The final answer is not clearly explained, the live example of Honda activa, Honda shine, bajaj boxer, TVS star , tvs scooty are eligible for input credit if they are used for transportation of goods like newspapers, vegetables, milk
Hell Mr. Garg, Pls give a light on the words mentioned under section 2(28) of the Motor vehicle Act ,1988 ” that motor vehicle does not include a vehicle having less than four wheels” . Since Bike and Scooty are having 2 wheels only they can not be categorised as Motor Vehicle”. Accordingly ITC will be eligible on these vehicle.
Hell Ms. Anupriya, Motor vehicle doesn’t include vehicle having less than four wheels fitted with engine capacity of not
exceeding
“[twenty-five cubic centimetres]”; since scooty and bikes have more than 25cc, they are categorised as motor vehicle and ITC is not available on the same. Do check out the act before opposing anyone. Peace.