Section 17(5) of CGST Act denies input tax credit on the specific supplies received by a registered person. Input tax credit on motor vehicles used for transportation of persons is ineligible. We shall discuss the same in detail.
According to Section 17(5) (a) of CGST Act, input tax credit is not available on motor vehicles used for transportation of persons having approved seating capacity of less than thirteen persons, this includes the seat of the driver.
At the same time, if such motor vehicles are used for making the following taxable supplies, input tax credit is available:
A. Further supply of such motor vehicles – the registered person is in the business of selling such motor vehicles
B. Transportation of passengers – the registered person is in the business of transport services of passengers
C. Imparting training on driving such motor vehicles – the registered person is in the business of providing training on driving by using such motor vehicles
Also Section 17(5) (ab) of CGST Act, denies input tax credit on the services of general insurance, servicing, repair and maintenance for the motor vehicles having seating capacity of less than thirteen.
At the same time input tax credit is available on the services related to motor vehicle insurance, repair and maintenance of such vehicles if they are used for the purposes mentioned in the Points A, B & C as above.
Apart from the points A, B & C above, ITC is available on the services of general insurance, servicing, repair and maintenance as received by a taxable person engaged in the manufacture of such motor vehicles or who is involved in the supply of general insurance services in respect of such motor vehicles.
ITC on Motor Vehicles used for transportation of goods
ITC on Motor vehicles used for transportation of goods in the business is available and ITC on the services of general insurance, servicing, repair and maintenance for such vehicles is also available.
CGST Act denies ITC on motor vehicles only on those mentioned in the Section 17(5) (a) with some inclusions and exclusions as discussed above, otherwise there is no restriction on availing ITC on other motor vehicles when they are used for business purposes.
Summary
1. ITC is not available on motor vehicles used for transportation of persons having seating capacity of less than 13 including driver’s seat
2. ITC is not available on the services of general insurance, servicing, repair and maintenance on motor vehicles used for transportation of persons having seating capacity of less than 13 including driver’s seat
3. ITC is available to the registered persons who further supplies such motor vehicles having seating capacity less than 13
4. ITC is available to the registered persons who is involved in the business of transportation of passengers even if such motor vehicles having seating capacity less than 13
5. ITC is available to the registered persons who provides training on driving on motor vehicles having seating capacity of less than 13
6. ITC is available on services of general insurance, servicing, repair and maintenance on motor vehicles having seating capacity less than 13 as long as they are used for providing the supplies as mentioned in Points No.3, 4 & 5 above and to those who are involved in the manufacture of such vehicles and are in the business of providing general insurance services for such motor vehicles
7. ITC available on motor vehicles used for transportation of goods
8. ITC available on the services of general insurance, servicing, repair and maintenance of motor vehicles used for transportation of goods
Disclaimer: This article is only for the purpose of understanding the provisions of the Act, The author bears no responsibility on decisions taken by the readers whatsoever. E&OE.
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I have availed ITC on commercial vehicle purchased during GST period. When sold after 5 years , is it necessary to repay input availed on the commercial vehicles
yes, Obviously
I have purchased a Commercial Vehicle for Business Purpose. I am dealing in FMCG Goods. Can i Claim Input of This vehcle.
Plz guide
My question : A dealer dealing on Salt is intending to buy a New Lorry for the transportation of Salt to its customers . The deduction of GST on Purchase can be claimed by the dealer for refund ? It is to be mentioned that the dealer has taken voluntary registration under GST as the salt is not taxable item . Please advise.
I have purchase a car can i claim gst paid in purchase of car as itc in my gst return ?
If I have bus AC for transportation of passengers more than 13 seating capacity I am collecting 5% gst can avail input on purchase of motor?
i am one of director in private limited company at chennai i will going to buy one new car in my private limited co name can possible take g.s.t . tax credit for new car
I purchased the car, can I claim GST in put which I received from motor company.
If he is registered person in the business of selling such motor vehicles. Raising the tax invoice while selling the vehicle & depositing the tax thru 3B , Can claim the input on repair & mtc.
IS ITC AVAILABLE FOR GENERAL INSURANCE, REPAIRS, SERVICES, CHANGE OF PARTS ETC IN CASE OF SECOND HAND CAR DEALER BUSINESS. AS IN SECOND HAND CAR DEALER SO MANY TIMES IT IS TO BE DONE SOME REPAIRS, MAINTAINANCE OR SOME PARTS TO BE CHANGE IF IT IS NOT WORKING PROPERLY CAN WE CLAIM ITC . PLZ REPLY
If you’re not availing the Margin Scheme, then you’re eligible to take ITC on these inward supplies. ITC is not available if one opts for Margin Scheme in GST.