The Authority for Advance Rulings (AAR), West Bengal has recently declared that input tax credit (ITC) will not be admissible against the GST paid on the purchase of motor vehicles for supplying rent-a-cab service, under the section 17(5)(b)(i) of the GST Act.. Motor Vehicles; ITC will not be available if vehicles, having the capacity of not more than 13 persons, is used for transportation and business purposes. Transportation of Goods is one of them. The credit can be availed subject to list of blocked credit. And as the said car is having seating capacaity less than 13. Cases where ITC on motor vehicle repairing/ insurance services is available even after amendment A careful reading of amended law gives us following situations where ITC on repairing/ insurance services of motor vehicle is still available (subject to, of course, fulfillment of other basic conditions for availment of any ITC) : 1. Also, ITC of general insurance, servicing, repair, and maintenance is also allowed in this case. The GST rate was reduced from 7% to 5% effective January 1, 2008, which changed the rates to be used for input tax credits on motor vehicle allowances… motor vehicles or other vehicles that require a permit under the Highway Traffic Act to operate on a highway, such as automobiles, motorcycles and motor scooters (including limited speed motorcycles), mopeds, buses, trucks and vans, motorized recreational vehicles (e.g., motor homes), and trailers (e.g., travel trailers, fifth wheel, sport trailer, etc.) Thus, ITC is not allowed "in respect of" motor vehicles and other conveyances except in specified cases. Sec 17(5)(a) are only for purchase of motor vehicle and in whole sec17(5) sub clause (a) to (h) there is no specifically mention about the ITC on repair and maintaince not allowed. ITC of Motor vehicle used as Taxi. a. further supply of such vehicles or As per my opinion ITC on insurance of motor vehicle used for the purpose of transportation of goods is not available as per CGST Amendment act 2018.But Govt has not notified the applicability of section 17 of amendment act.Hence you can take ITC on insurance of Motor Vehicle. The language in the new Amended Act is like:- ” 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the driver), except when they are used for making the following taxable supplies, namely:— Your email address will not be published. Question raised was on eligibility to such credit. Dear Sir, In this regards, please refer Section 17(5) of CGST Act, 2017, it clearly stipulates that ITC of motor vehicle is available for ‘namely’ services, as per your query the motor vehicle as mentioned by you is not commercially registered under Motor Vehicle Act, therefore, it cannot be used for any commercial purpose such as transportation of passengers or goods. ITC on renting of motor vehicles for period from 1.7.2017 to Jan 2019, There was specific restriction on the ITC of the rent-a-cab services and it could be availed only if such services are used for-, a. making an 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. Now provisions for ITC of a … Additional Commissioner of CGST and Central Excise, Rajiv Agarwal and Joint Commissioner of Commercial Tax, Manoj Kumar Choubey while processing the application was of the point of view that, “The applicant is entitled to avail ITC on vehicle which are further supplied to customers on lease rent, subject to condition apllicable as per section 17(5) of … The department may take a view that 'cab' covers motor cab and maxi cab/any motor vehicle to carry more than 12 passengers excluding driver. The term ‘rent-a-cab' and ‘motor cab' is not defined under GST. View Profile | My Other Post. ABSTRACT OF SECTION 17(5) BLOCKED CREDIT (APPLICABILITY AFTER 01-02-2019 ) FOR MOTOR VEHICLE. • This also implies that it includes renting of motor cars, motor cabs, maxi cabs, mini buses, buses and all other motor vehicles which are designed to carry passengers, irrespective of their capacity to carry passengers. The concept of rent-a-cab is originating from ‘rent-a-cab' scheme, 1989 framed u/s 75 of Motor Vehicles Act, 1988. 2. Use of Inputs for Taxable / zero rated supplies – ITC will be available. … As now restriction is only on passenger vehicles. The ITC is claimed in the GST/HST return for the period in which the vehicle was acquired. ITC on leasing, renting or hiring of such motor vehicles with capacity of 13 persons[including driver] for transport of persons is available as follows: The leasing services of motor vehicle, with capacity more than 13 persons[including driver] for transport of persons is available and is not restricted under GST. You must be registered for the GST/HST to claim input tax credits. Let us have a look on modifications. Read point 4 for GTA case ) 1. B). GST Payment and Input Tax Credit Calculator, Click here to Join Tax Updates Whatsapp Group, GSTR 9 and GSTR 9C due date extension requested by CGPI, CS Exam June 2021: List of cities of CS exam centre released, 5 Steps to get Financial Freedom in your life. A person cannot avail ITC wherein the given motor vehicle is used to transport people and has a seating capacity of less than or equal to 12 +1 (driver) ITC is not available on vessels and aircraft. This last chance maybe taken to ensure that all eligible credit of 2017-18 is availed. AUTOMOBILE EXPENSES & RECORDKEEPING 2 If your circumstances match any of the following situations, you should be maintaining automobile tax records: 1. But reality is that ITC is not available on motor vehicle providing transportation with seating capacity less … If call was taken to avail credit on renting of motor vehicle to carry more than 6 passengers[excluding driver] avail such credit under intimation to dept by RPAD letter and seek confirmation to ensure that there are no demands to reverse/pay back such credit availed along with interest at 24%. Rent-a-cab under Motor Vehicles Act, 1988: On going to Motor Vehicles Act, 1988 it does not define the term ‘rent-a-cab'. 2 Like. Last updated at Nov. 3, 2020 by Teachoo ITC OF CAR Goods Transport (Like Truck ,Tempo) ITC Available to all types of business Passenger Transport ITC Available only to Car Selling Business Passenger Transport Business Motor Driving Training Business ITC of Cars,bus,2 Wheelers is Not Available to other Business … • The applicant is not eligible for input tax credit of GST charged by the Contractor for hiring of buses/cars for transportation of employees. If a vehicle is designed to carry individuals and their luggage and can seat the driver and eight or less passengers and is a van, pick-up truck, or similar vehicle the CCA is restricted by forcing the taxpayer to put that vehicle into a CCA class that caps the depreciable limit at $30,000 plus applicable taxes. Even the ITC of JCB, cranes etc will also be … It may be noted here that input tax credit on motor vehicles is generally blocked under Section 17(5)(a) of the CGST Act, 2017 and is available when such motor vehicle is used for further supply, transportation of passengers and imparting training of driving of such vehicles. Transportation of … Other motor vehicles The standby charge GST/HST and QST considerations Summary Worksheets Summary of automobile benefit amounts and deduction limits . ITC of motor vehicle is restricted until the amendment in CGST Act. You can also watch a video on this topic in the end of this article. Generally ITC on Motor Vehicles is BLOCKED u/s 17(5) of the CGST Act 2017. So, ITC … A careful reading of amended law gives us following situations where ITC on repairing/ insurance services of motor vehicle is still available (subject to, of course, fulfillment of other basic conditions for AVAILABLE of any ITC). However, In following 3 cases, you don’t have to check seating capacity. ITC can be claimed on goods transport vehicle and passenger transport vehicle (having approved seating capacity of more than 13 persons (including driver)) without any exceptions. Hi Sharon, There are special and strict rules for claiming input tax credits on vehicles. ITC is available. For Motor Vehicles: Input Tax Credit for motor vehicles used for transportation of passengers having seating capacity of up to 13 passengers is generally not available. Section 17(5) of CGST Act is amended from 1.2.2019. ii. cash carry vans for banks and cash is not goods. Insurance premiums are treated differently for taxation purposes depending on whether a motor vehicle owner is registered for Goods and Services Tax (GST) and has an Input Tax Credit (ITC) entitlement. ITC on Motor vehicles from July 2017 to Jan 2019: ITC of the tax paid on the motor vehicles was blocked and should not be availed by a registered person. Whether Purchase of Car is Input or Capital Goods If car used for … Transportation of Goods. ITC on Motor Vehicles. If such stance were taken then credit would be restricted on renting of only motor cabs to carry not more than 6 passengers[excluding driver]. One can claim ITC on a motor vehicle for making Taxable supplies in the cases below-. Professional Course, Course on GST Exports Meaning of Lease: The term lease is not defined in CGST Act, 2017. However, ITC of motor vehicles would be availed only if it is used for making the following taxable supplies: i. conveyances; Credit on motor vehicle insurance, repairs: Post Feb 2019. 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