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

ITC Allowed on Vehicles Used for Taxable Passenger Transport Under GST Section 17(5)(a)(B) A registered professional who purchases a two-wheeler or four-wheeler and uses it partly for providing taxable passenger transportation services through platforms like ride-sharing may claim input tax credit (ITC) under GST law. Section 17(5)(a)(B) excludes ITC on motor vehicles except when used for taxable supplies such as passenger transportation. If the vehicle is genuinely used to provide taxable passenger transport services and GST is charged on those services, ITC on the vehicle purchase is permissible. However, if the vehicle is also used for non-business or exempt activities, or not solely for transportation services, ITC eligibility may be restricted. The key factors are the nature of use and whether GST is paid on the transportation services provided.