ITC for transportation of employees in bus

[Madhavan iyengar]

A Vehicle operator has a 50 seater bus, and has a contract with a company for pick up and drop of employees of company to factory in the 50 seater bus,

He levies 12% GST can company get ITC on the Charges paid to the vehicle operator. SAC code 996601

issue: ITC eligibility under current law and post amendment 01/02/2019

AI Summary

Input tax credit eligibility for employee transport hinges on rent-a-cab classification and employer obligation under GST.
ITC on employer-hired bus services depends on whether the service is categorised as rent-a-cab disallowance and whether providing transport is obligatory for the employer; experts argue vehicles carrying more than six passengers used for employee transport are not rent-a-cab and thus ITC is allowable, while a contrary advance ruling found such services disallowable absent proof of a statutory obligation. Hiring a bus where GST is not charged ordinarily does not attract reverse charge, and questions persist about perquisite treatment and Schedule I interaction.