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GST credit on motor vehicle

29 July 2018

If a motor vehicle(say car) is purchased in the firm name and used for the business of firm, can we take the credit of GST paid on the motor vehicle for output of GST??

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5 Replies

Giriraj Kabra (71 Points)
Replied 29 July 2018

Input tax credit in respect Motor vehicle is not available.
motor vehicles and other conveyances except when they are used-
(i) for making the following taxable supplies, namely: -
(A) further supply of such vehicles or conveyances; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or
conveyances;
(ii) for transportation of goods.
so in above cases it is available

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Vinod Babu (24196 Points)
Replied 29 July 2018

As per section 17(5) of CGST Act, input tax credit will not be available in respect of motor vehicles and other conveyances,except when

such motor vehicles or other conveyances are supplied further, or

used for transportation of passengers or giving training on driving, flying, navigating such vehicles or conveyances or

are used for transportation of goods.

Hence, if your firm does a business that falls under any of the categories mentioned above, it can claim the input tax credit.

Remember, both input tax credit of GST paid on purchase of such capital goods and depreciation u/s Income Tax Act 1961 will not be allowed together. You can either claim input tax credit of GST, or depreciation u/s Income Tax Act 1961.