ITC on Hiring of motor vehicle

[Kumar Kedia]

Sir,

A company is engaged in providing helicopter transportation services to the customer. The company has the contract with travel operator and whenever any employee uses the cab services, the travel operator raises the bill to company on which company deducts TDS. Can he avail credit on hiring of motor vehicle for the transportation of employees. Can it be said that it is providing the same category of service?

AI Summary

Input tax credit restriction on motor vehicles bars credit for hired cabs used to transport employees, absent passenger-transport supply.
Section 17(5)(a) bars input tax credit on motor vehicles for transporting persons with approved seating capacity up to thirteen, except when used for further supply, transportation of passengers, or driving training. Hiring vehicles to transport a company's employees does not meet these exceptions because employees are not treated as passengers for this purpose; therefore, input tax credit on such hires is not available. Rent-a-car services are also identified as excluded from ITC under the negative list.