car repair and car insurance

[Satbir singh wahi]

whether itc on car repair and car insurance available to a business concern

[Rajagopalan Ranganathan]

Sir,

According to Section 16 (1) of CGST Act, 2017 "every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

According to Section 17 (5) (a) of CGST Act, 2017 "Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:-

(a) 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.

Therefore if the car is used in the course or furtherance of his business itc is available . Otherwise it is not available.

[Satbir singh wahi]

Thanks Sir

[Himansu Sekhar]

Yes, the ITC is not allowed

[Satbir singh wahi]

Sir

pls give if any circular

[DR.MARIAPPAN GOVINDARAJAN]

The advice given by Shri Renganathan is sufficient.

[Satbir singh wahi]

Sir

Is there any circular recently that says car repair and car insurance not available.Pls guide.

[Rajagopalan Ranganathan]

Sir,

Circular will be issued only to clariffy any ambiguity arising out of legal provisions. Here the law is very clear and hence no circular is required to be issued. As far as my knowledge goes there is no circular issued by CBIC on this matter.

[Himansu Sekhar]

If the car is for business purpose itc is available.I amend my view.

[Ganeshan Kalyani]

In my view if the person is in the business of plying car then credit on the repair of car is eligible.

[Nash Industries I Pvt Ltd]

Credit is restricted as explained by Mr Rajagopalan.

Even if the car is used in the business, ITC is allowed only if it is used in the business of supplies of such vehicles (sale of cars) or for transportation of passengers (rent a cab) or for driver training.

For any other business it is not allowed

Regards

S.Ramaswamy

[Ganeshan Kalyani]

The word used in the section 17(5) regarding motor vehicle is "in respect of" which means only motor vehicle and the expense of repair. If the work would have to "in relation to" then I agree the credit is not eligible.

[Nash Industries I Pvt Ltd]

Thank you Mr Ganeshan for the clarification.

If the repair and insurance service is paid by the business concern for business purpose it is allowed, If paid by the business concern for personal consumption not allowed in terms of Section 17(5) (g).

Regards

S.Ramaswamy

Sir

How it clear that car use in person or Business work .once car use only pick & drop to resi to work place and rest time use in Business work and holiday and weekly off day use in personal work. than what status.

[Nash Industries I Pvt Ltd]

After the amendment in Section 17 of CGST Act effective 29th Aug 2018, no credit allowed on repair and insurance of car even if used for business with exception as specified under revised section 17(5).

Regards

S.Ramaswamy

AI Summary

Input tax credit on motor vehicle services limited; eligible only for resale, passenger transport or driver training uses.
ITC for car repair and insurance is available only where the vehicle is used in the course or furtherance of business and falls within the Section 17(5) exceptions: further supply of such vehicles, transportation of passengers, imparting driver training, or transportation of goods. Otherwise, ITC is not allowed; a subsequent amendment further restricts credit on repair and insurance except as expressly permitted by the revised provision.