ITC On car pickup drop service

This query is : Resolved

Mahendra Patel (Querist)
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07 June 2021 Dear sir

I am recently register under GST for lucky travels agency .
And I am purchased Car Maruti baleno and attached the same in a customer place for pickup and drop his staff member .

I need to generate invoice on monthly basis of rs 35000 + GST
So my question is hear can I used ITC which is available in my credit ledger (at the time of purchase of car)

So can I used above ITC ??
I have only one car

CA. Bhavik P. Chudasama

CA. Bhavik P. Chudasama (Expert)
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08 June 2021 Yes you can claim the ITC on car since its in the same line of business as per Section 17(5)(a)

Mahendra Patel

Mahendra Patel (Querist)
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26 February 2022 And the Same ITC taken by customer ?

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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02 August 2024 When it comes to claiming Input Tax Credit (ITC) on a car used for providing transportation services, there are specific GST provisions and rules to consider. Here’s how ITC applies to your situation:

### **1. ITC on Purchase of Car**

Under GST, ITC on the purchase of motor vehicles, including cars, is subject to certain restrictions:

- **ITC Restrictions on Motor Vehicles:**
- As per **Section 17(5)(a)** of the CGST Act, ITC is **not available** for motor vehicles that are used for personal use or for carrying passengers, unless the vehicle is used for specific purposes like:

- **Supply of such vehicles**: If the vehicle is sold as part of your business operations.
- **Rental or leasing of such vehicles**: If you are in the business of renting or leasing vehicles.
- **Transport of goods**: If the vehicle is used for transportation of goods, ITC can be claimed.

- Since you are using the vehicle for pickup and drop services, this falls into the category of providing passenger transport services. Hence, ITC on the purchase of the vehicle is **not eligible** for your business under the given circumstances.

### **2. ITC on Car Pickup and Drop Services**

- **Service Provided:**
- For the car pickup and drop services you provide, the GST you charge on your invoices can be claimed as ITC by the recipient if they are also a registered business and use the service for their business purposes.

- **Customer’s Claim:**
- If your customer is registered under GST and uses your service for business purposes, they can claim the ITC on the GST paid to you, provided the service qualifies as input service for their business.

### **3. Invoice and ITC Process**

- **Invoicing:**
- You should issue a proper GST invoice for the services you provide, mentioning the GST rate and amount.

- **Claiming ITC by Customer:**
- The customer, if eligible, can claim ITC on the GST paid to you based on the invoice you provide.

### **Summary:**

- **ITC on Car Purchase:** Not eligible under **Section 17(5)** as it is used for passenger transport services.
- **ITC on Services Provided:** GST charged on the services you provide can be claimed by the recipient if they use the service for business purposes.

For the most accurate advice and to ensure compliance with the latest GST regulations, consulting a GST professional is recommended. They can provide guidance tailored to your specific business situation.