ITC ON VEHICLE MAINTENANCE

[RV PERUMAL]

ONE CONSTRUCTION COMPANY PURCHASES LORRIES FOR SHIFTING/PURCHASING SAND, BRICKS & OTHERS FOR FURTHERANCE OF BUSINESS. MY QUESTION IS WHETHER ITC ON PURCHASE OF LORRY ALLOWED, IF YES, IS THERE ANY NOTIFICATION? MOREOVER, ITC ON SPARES, SERVICES FOR THE SAID LORRY ALLOWED? PLEASE CLARIFY

[KASTURI SETHI]

ITC on lorries is allowed. Prior to 1.2.19 it was covered under Exclusion clause of blocked credit under Section 17(5) (a) (ii) of CGST Act " For transportation of goods". W.e.f. 1.2.19 blocking of ITC was relaxed by way of omitting the words, "other conveyance'. Vide CGST Amendment Act, 2018. Lorry is covered under 'Other Conveyance'. To clarify further legal position before 1.2.19 and after 1.2.19 are to be compared:

Section 17(5) of CGST Act w.e.f. 1.2.19

(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely :-

[(a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely :-

(A) further supply of such motor vehicles; or

(B) transportation of passengers; or

(C) imparting training on driving such motor vehicles;

(aa) vessels and aircraft except when they are used -

(i) for making the following taxable supplies, namely :-

(A) further supply of such vessels or aircraft; or

(B) transportation of passengers; or

(C) imparting training on navigating such vessels; or

(D) imparting training on flying such aircraft;

(ii) for transportation of goods;

(ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) :

Provided that the input tax credit in respect of such services shall be available -

(i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein;

(ii) where received by a taxable person engaged -

(I) in the manufacture of such motor vehicles, vessels or aircraft; or

(II) in the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him;

BEFORE 1.2.19 Section 17(5) of CGST Act.

(a) Motor Vehicles and other conveyances

(ii) for transportation of goods.

Both phrases "Other conveyances' and 'transportation of goods' stand omitted w.e.f. 1.2.19.

Also see the legal definition of 'lorry' . Prior to 1.2.19 ITC was allowed under clause, 'transportation of goods' and w.e.f. 1.2.19 ITC has been allowed by way of deletion of the phrase' other conveyances' from blocked credits of goods and services.

[RV PERUMAL]

RESPECTED SIR, I AM EXPECTING WHAT IS THE STAND FOR VEHICLE REPAIR SPARES AND SERVICE ITC

[KASTURI SETHI]

W.e.f. 1.2.19, the scope of availing ITC on Motor Vehicle has been widened. With the deletion of the words, "other conveyances' from the blocked credit, there is no restriction or condition on other conveyances. 'Other conveyances' includes dumpers, work-trucks, fork-lift trucks and other special purpose vehicles. Other Conveyances are for Specific Purposes.

Conditions mentioned in 17(5)(a) are not applicable for other conveyances, these being for specific purposes.

Thus in my view ITC on lorries for repair, maintenance, service and general insurance is allowed.

[Shilpi Jain]

Agree with Kasturi sir, credit will be eligible now. Though ensure that the projects for which the lorry is used is not under 5% and also ensure that required credit reversal is done as per rule 42 at the end of the project.

[Ganeshan Kalyani]

I also agree with the views of Sri Kasturi Sir. The ITC on lorry is allowed and that of its repair expense as well.

AI Summary

Construction Firms Can Claim ITC on Lorries for Material Transport Post-CGST Amendment; Ensure Compliance with Rule 42. A construction company inquired about the eligibility of Input Tax Credit (ITC) on lorries used for transporting materials like sand and bricks, as well as on related spares and services under the Goods and Services Tax (GST) framework. Responses clarified that ITC on lorries is permissible, especially after February 1, 2019, when amendments to the Central Goods and Services Tax (CGST) Act removed 'other conveyances' from the blocked credit list. This change allows ITC on lorries and related expenses such as repairs and maintenance. However, users must ensure compliance with specific GST rules, including credit reversal under Rule 42.