ITC on Demo Cars for Motor Vehicle Dealers: GST AAR Kerala

In re Sai Service Private Limited (GST AAR Kerala) In the case of In re Sai Service Private Limited, the Authority for Advance Rulings (AAR) Kerala examined whether the applicant, engaged in the motor vehicle supply business, could claim Input Tax Credit (ITC) on motor vehicles used for demonstration purposes. The applicant argued that demo vehicles, essential for sales promotion and used for test drives, are capitalized as fixed assets and not eligible for ITC initially. However, they claimed eligibility for ITC under Section 16(1) of the CGST Act, 2017, since the demo cars are later sold as ...