ITC on motor vehicle

[THYAGARAJAN KALYANASUNDARAM]

Dear experts,

I have one small clarification on ITC eligibility in the following.

My client is a trader for supplying of goods to various locations in India through his own motor vehicles that was purchased in his company name. Will he be eligible to claim ITC against the purchase of motor vehicle.

Thanks on advance.

[Rajagopalan Ranganathan]

Sir,

ITC of gst paid on motor vehicles used for transportation of goods is available.

[Shilpi Jain]

Why is there a doubt on this?Tthe moment it's a goods vehicle, credit is eligible

[THYAGARAJAN KALYANASUNDARAM]

Thank you so much for your reply.

[KASTURI SETHI]

I support the views of experts. I also add as under:-

Before 1.2.19

Section 17(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 and other conveyances except when they are used––

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

(A) further supply of such vehicles or conveyances ; or

(B) transportation of passengers; or

(C) imparting training on driving, flying, navigating such vehicles or conveyances;

(ii) for transportation of goods;

After 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;

If we compare the language of Section 17(5) (a) above, ITC on motor vehicle used for transportation of goods was allowed before 1.2.19 and is allowed even after 1.2.19. Earlier it was specifically mentioned in the exclusion clause and after 1.2.19 it is out of blocked credit.

[PAWAN KUMAR]

Dear sir,

as per my view, iTc not eligible since amended GST 17(5) with effect from 01.02.2019, inserted clause (a) and clause (aa), the entry which relates to transportation of goods have now been assigned to clause (aa). experts can please review and share their inputs.

[Shilpi Jain]

The blocking of credit under section 17(5)a is only with respect to vehicles for transportation of passengers. Thereby vehicles for transportation of goods, there is no blockage of credit.

[KASTURI SETHI]

Dear Sh.Pawan Kumar Ji,

Pl. re-examine your views and if you are right, pl. discuss at length on this forum. What is, de facto, impact of above amendment ? With due regards to you.

[PAWAN KUMAR]

dear sir,

Re-checked provisions, you are right sir, ITC is eligible for motor vehicles for transportation of goods.

[KASTURI SETHI]

Dear Sir,

O.K. Sir. Thank you very much for your concurrence on the issue.

[MANISH SINHA]

Yes Vehicle used for Transportation of Inputs/ capital Goods/ FG in furthrance of Business is eligible for Credit.

[PAWAN KUMAR]

service and repairing, insurance of such motor vehicles will be eligible for itc ?, experts plz also guide on the same.

[Ganeshan Kalyani]

Yes Sir it is eligible.

AI Summary

Input tax credit on goods vehicles permitted; claim extends to related repair and insurance when used for goods transport.
Input tax credit is available for motor vehicles used for the transportation of goods; amendments to the exclusion provision now focus on passenger vehicles, leaving goods-transport vehicles eligible for credit. Costs directly attributable to such goods-transport vehicles, including repair, servicing and insurance, are also eligible for input tax credit when used in furtherance of business.