GST paid on purchase of vehicle

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This discussion clarifies whether GST paid on vehicle purchases exceeding ₹10 lakh is included in the vehicle's cost for depreciation calculations. Generally, GST forms part of the vehicle's cost, unless Input Tax Credit (ITC) is claimed. Other expenses like road tax and insurance are also added to the asset's cost. It's noted that ITC on motor vehicles is restricted to specific business types, and claiming full depreciation is often more advantageous.

CA Sudeep Singh

CA Sudeep Singh (Querist)

17 May 2021 Whether gst paid on purchase of vehicle whose value exceeds Rs 10 lakhs would form part of cost of vehicle for the purpose of computing depreciation?
Also kindly let me know what would be accounting treatment of various other taxes paid while buying the vehicle.

CMA Poornima Madhava

CMA Poornima Madhava (Expert)

17 May 2021 1) Yes, GST is part of cost of the vehicle (unless ITC is availed where allowed)
2) All other expenses like road tax, insurance etc form part of the cost of the asset.

CA Satish Badve

CA Satish Badve (Expert)

17 May 2021 ITC on Motor vehicle can only be claimed for specific business like transportation,Training schools,and persons dealing in buying and selling of vehicles.It is better to claim full depreciation instead of ITC as the same is available for specific business U/s 17(5) of the CGST Act.

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