ITC ON BUS PURCHASE - GIVEN ON RENT TO COMPANY FOR THEIR EMPLOYEES PICK UP AND DROP

[RAVINDRA SANCHETI]

Hello Sir

I have following query

- Assessee have purchased one Bus and one car to give on rent to different companies for their employees and guest pick up and dropping facility. They charged rent on monthly basis including per KMS basis. Need clarifications on following with reference to Notification no 11/2017, 20/2017, 31/2017 of Central Tax (Rate)

1. What should be the SAC code for rent services - 9964 passenger transport services or 9966 Rental Services of Transport Vehicle. As per me should be 9966.

2. Whether Assessee can avail ITC benefit on Bus and Car Purchase (with payment of 12% GST) If I go with SAC code 9966 then as per negative list of ITC u/s 17(5) since the credit is available in case of transportation of passengers only will it be correct to avail the credit on Rental services.

3. Whether Transport of passenger cover rental services of bus and car also, under notification no 11- SAC code 9964 clause (vi). If not what kind of services covered under this category.

4 Whether the customer to whom we are billing can avail GST credit on invoices of BUS and Car both.

[ANITA BHADRA]

Dear Sir

SAC code for rent services - 9966.

9964 is for transporting passenger while in your case motor vehicle has been given on Rent .

As per Sec 17(5)(a) - ITC will not be available on PURCHASE OF MOTOR VEHICLE & OTHER CONVEYANCE except when it is for transportation of passengers . It will not be correct to avail the credit on Rental services.

Clause vi - 9964 covers where owner of motor vehicle used it for transporting passenger . In your case its being rented out , hence it covers under 9966 .

Regards

[CSSANJAY MALHOTRA]

ITC Credit is available if the vehicle is given on rent. It's usage can be for any purpose and in your case, the service rendered is Renting of Motor Vehicle and ITC admissible.

[KASTURI SETHI]

Sh.CS Sanjay Malhotra Ji,

Sir, Such replies/clarification are worth saving to be used as ready reckoner for future by the assessees. Thanks a lot.

[Ganeshan Kalyani]

ITC is admissible u/s 17 (5)(a)(i)(A).

[RAVINDRA SANCHETI]

Thanks a lot for quick response with detailed analysis.

[Chintamani Bhide]

However, the 4 th question :4 Whether the customer to whom we are billing can avail GST credit on invoices of BUS and Car both.has remained unanswered.

AI Summary

Input tax credit on motor vehicles: renting buses may be excluded under ITC negative list; classification affects eligibility.
Input tax credit eligibility depends on classification and the ITC negative list: vehicles rented out fall under renting of motor vehicles (SAC 9966) rather than passenger transport (SAC 9964). The ITC negative list generally disallows credit on motor vehicle purchases except where vehicles are used to provide passenger transportation; the discussion records conflicting views on whether renting vehicles to other companies qualifies for credit and whether hirers can claim credit on such invoices.