GST - ITC eligiblity on 2wheeler & 4wheeler for the Registered Person who is also giving part time services of Rapido/Bla Bla car

[KSA Associates]

Dear Experts,

Mr.A is registered person. He is a professional and earns the professional fees. He buys the Bike/Car say for 15 Lakhs and accordingly have ITC on it of Rs 4Lakhs. He also give rides in his car/bike via rapido/Bla Bla car (Car Polling services) while going to & fro to home & office. He is of the opinion that since he is giving the taxable supply of transporting the passenger, he is eligible to avail the credit of mammoth 4 Lakhs as per section 17(5)(a)(B). Whether his opinion is correct or not . Give the detail reasoning for the same

 

[Sadanand Bulbule]

Section 17 of the CGST Act:

(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 the subject motor vehicles are used for providing taxable services like transportation of passengers, then ITC is allowed under clause (b) above.

[Shilpi Jain]

Is he paying GST on the charges collected for transportation serivces? Also, is the bike or car solely used to provide only transportation services?

All these aspects would be relevant to analyse before concluding on eligibility.

AI Summary

Input tax credit for passenger transport: allowed if vehicle used for transportation services; confirm taxable supply and exclusive use. ITC on motor vehicles seating not more than thirteen persons is generally disallowed under the exclusion in Section 17(5)(a), but an exception permits ITC when those vehicles are used to supply transportation of passengers. Therefore, where a registered person uses a car or bike to provide taxable passenger transport services, ITC may be available; however, entitlement depends on factors such as charging GST on the fares and the degree to which the vehicle is used for the taxable transportation activity.