Truck Eligibility For GST Credit

[Guest]

Dear All,

If We are purchasing new truck for internal movement of some material in our coal thermopack plant, will credit be available?

[KASTURI SETHI]

ITC is available on a truck used for transportation of goods within a factory. It is being used in the course of business or furtherance of business. Truck is a capital goods. See the definition of 'Capital Goods' provided under Section 2 (19) of CGST Act.

19) “capital goods” means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business;

No depreciated will be claimed under Income Tax Act.

[Guest]

Ok, thank you Sir.

[Rachit Agarwal]

Section 17(5) does not block the credit of input tax if the vehicles used for otherwise then passengers. Hence credit of input tax available. Further AAR Ishan Paints and Chemicals = 2020 (1) TMI 881 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL has ruled for allowing the credit of input tax

[Kashish Gupta]

Mr. Mitresh Vaghela,

Input tax credit on motor vehicle used for the purposes of transportation of goods has not been restricted since 01.07.2017. Therefore, credit is available be it related to period before 01.02.2019 or after. [Refer section 17(5)(a) of CGST/SGST Act, 2017].

[Guest]

Thank you for more clarity

AI Summary

Input tax credit on vehicles used for transporting goods remains available where the vehicle is capital goods used in business. Input tax credit is available on a truck used for internal transportation where the vehicle is capitalised in the claimant's books and used in the course or furtherance of business; depreciation under the Income Tax Act will not be claimed. The restriction on motor vehicle credit applies to passenger vehicles and does not deny credit for vehicles used to transport goods, a position supported by administrative rulings and commentary.