CA Suresh Jain
Quick Summary
During Internal Audits and statutory audits, I came across various misunderstandings in the mind of the persons in-charge of Indirect tax department with respect to ITC on Motor Vehicles, other Conveyance, repairs and maintenance thereof etc. This prompted me to share my analysis on this subject wit
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FAQ :
From February 1, 2019, ITC is disallowed on motor vehicles for transporting persons with a seating capacity of up to 13 (including the driver), unless used for further supply, passenger transport, or driving training. ITC is also disallowed on vessels and aircraft, except for similar specific uses and goods transportation. Services like general insurance, repair, and maintenance for these vehicles are also restricted.
Yes, ITC is available if motor vehicles are used for making a further supply of such vehicles, for transporting passengers, or for imparting driving training. ITC is also available for vehicles used for transporting goods, or for vehicles with a seating capacity of more than 13 persons (including the driver).
From February 1, 2019, ITC is disallowed on services of general insurance, servicing, repair, and maintenance related to motor vehicles, vessels, or aircraft, unless these vehicles are used for the specified purposes (like further supply, passenger transport, or training) or if the recipient is in the business of manufacturing or insuring them.
Generally, ITC is not available for leasing, renting, or hiring motor vehicles for transporting persons with a seating capacity of up to 13 (including the driver), vessels, or aircraft. However, ITC is available if these are used for further supply, passenger transport, training, or as part of a composite taxable supply.
Under the new provisions, ITC may now be available on 'other conveyances' that are not motor vehicles, vessels, or aircraft, such as cycles or cycle rickshaws. ITC is also available for vehicles running on fixed rails (like locomotives) or those adapted for use only within specific premises like factories.
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