ITC credit for GST paid on new car.

[Kashinath Hegde]

I have bought a new car to use in my business (Aircraft maintenance service) for daily commute. I have GST invoice. Can I claim ITC while filling GSTR-3B? If yes how to proceed in item 4(A),4(B),4(C)?

[Sadanand Bulbule]

Plz refer Section 17 of the CGST Act for blocked ITC:

(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; 

(C) imparting training on driving such motor vehicles;

I think your new car is covered by under Sub-clause (a) above. Hence you cannot claim ITC on such car as it does not fulfill the three specified exceptions[supra].

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

As per the Restricted provision of Section 17(5) of the CGST Act,  ITC cannot be claimed on the rent for passenger cars with a seating capacity of less than 13 people, except when used for making outward taxable supply of the Same Category of goods or services or both or – As an Element of a taxable composite or mixed supply or – The Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force—vehicles used for Imparting motor driving or training skills Vehicles used for transportation of Passenger.

In your case, it is for the use of the car for travelling from the Airport to the business place. This activity falls under the category of approved seating capacity below 13 members. Hence, not eligible for ITC.

[KASTURI SETHI]

ITC is hit by Section 17 (5) of CGST Act. 

                  

[Shilpi Jain]

17(5) restriction applies irrespective of the fact that you use the car for your business.

AI Summary

Input tax credit restriction for passenger motor vehicles bars claiming ITC for business-use cars used for commute. Section 17(5) precludes input tax credit on motor vehicles with seating capacity of not more than thirteen persons except where used for further supply of such vehicles, transportation of passengers, or imparting driving training, and carve-outs exist for vehicles forming part of a taxable composite or mixed supply or where Government notification makes the service an employer-obligatory benefit; a passenger car used for daily commute between airport and business premises does not meet these exceptions and is therefore not eligible for ITC.