TaxTMI 
TaxTMI 
XYZ taking credit of the GST paid towards Bus service provided by the service provider for transporting their employees from residence to office and back having sitting capacity of more than 13 persons. Can XYZ take credit or will be disallowed being used for the personal consumption of the employees?
ITC on bus service
19 May 2019 
2 Replies 
1513 Views Asked by
Input tax credit for employee transport hinges on proving it is an essential, obligatory input used in furtherance of business.
Whether GST paid for employee bus transport is eligible as Input Tax Credit depends on whether the service is a business input used in furtherance of taxable supplies or a service for personal consumption that is disallowed. Claimants must prove transportation is an essential, obligatory input and that it functions as an input service. An AAR (YKK) rejected credit where obligatory nature was not shown. The issue is contested and may attract appeals, so an AAR or strong evidentiary record is recommended. (AI Summary)
Whether GST paid for employee bus transport is eligible as Input Tax Credit depends on whether the service is a business input used in furtherance of taxable supplies or a service for personal consumption that is disallowed. Claimants must prove transportation is an essential, obligatory input and that it functions as an input service. An AAR (YKK) rejected credit where obligatory nature was not shown. The issue is contested and may attract appeals, so an AAR or strong evidentiary record is recommended. (AI Summary)