GST on Taxi Service

This query is : Resolved

LALIT SHARMA (Querist)
Follow

22 January 2026 Sir, I have a taxi business and I have registered my GST number. I have received ITC on vehicle purchases and I have claimed it in GSTR-3B. Now I want to know if I charge 5% GST on my services, can I set off the output GST from the available ITC in the credit ledger? Also, please tell me which GST rates are applicable to us. Please explain the rules for ITC as well. Thanks.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
Follow

26 January 2026 If you choose to charge 5% GST, you are legally barred from claiming ITC on the purchase of the vehicle. If you have already claimed it in your GSTR-3B, you must reverse it immediately with interest to avoid heavy penalties.

the 5% rate is a "concessional rate" specifically conditioned on the fact that you do not take ITC on "Capital Goods" (the vehicle).

If you want to use the ITC you received on your car purchase to pay your output tax, you must charge 12% GST on your invoices.

If you stay at 5%, the ITC on your vehicle purchase becomes "blocked credit" under Section 17(5) and must be reversed.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Summarize this with AI

ChatGPT Perplexity Claude Google AI Grok