Clarification on availability of GST Input Tax Credit on Demo Vehicles

| Last updated: 08 May 2025

Quick Summary
This article clarifies the availability of GST Input Tax Credit (ITC) for demo vehicles used by authorised motor vehicle dealers. It explains that ITC on demo vehicles is generally available as they are used to facilitate the further supply of similar vehicles, falling under an exception to the blocked credit rules in Section 17(5) of the CGST Act. The article also confirms that capitalising these vehicles in the dealer's books does not affect ITC availability, provided depreciation hasn't been claimed on the tax component.

Background Under theGoods and Services Tax (GST) regime, Input Tax Credit (ITC) is generally available on goods and services used in the course or furtherance of business. However, Section 17(5) of the Central Goods and Services Tax (CGST) Act, 2017 provides exceptions, i.e., situations where ITC i
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Mohd Muaz Malik

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