INPUT GST CREDIT OF VEHICLE EXP
This query is : Resolved
05 August 2017
CAN WE TAKE INPUT CREDIT OF VEHICLE EXPENSE LIKE SPARES BILL, TYRES BILL ETC.. ?
01 August 2024
Under the Goods and Services Tax (GST) regime in India, the eligibility for claiming Input Tax Credit (ITC) on vehicle expenses such as spares, tyres, and insurance depends on the purpose for which the vehicle is used and the nature of the business. Here is a detailed analysis based on the provisions of the GST law:
### Input Tax Credit on Vehicle Expenses
#### 1. **Spares and Tyres**
**Eligibility:**
- **For Business Purposes:** If the vehicle is used for business purposes, ITC on spares and tyres can be claimed provided the vehicle is not covered under the blocked credit category as per Section 17(5) of the CGST Act, 2017.
- **For Personal Use:** If the vehicle is used for personal purposes, ITC cannot be claimed.
**Blocked Credits:**
- ITC is not available for motor vehicles and conveyances unless they are used for:
- Making taxable supplies (e.g., for transportation of passengers, goods, or providing training on driving, flying, navigating such vehicles or conveyances).
- Transportation of goods.
#### 2. **Insurance**
**Eligibility:**
- ITC on vehicle insurance can be claimed if the vehicle is used for business purposes and is not covered under the blocked credit category. However, ITC on insurance is specifically blocked under Section 17(5) of the CGST Act unless certain conditions are met.
**Blocked Credits:**
- ITC on insurance for motor vehicles is blocked unless it pertains to:
- Vehicles used for making taxable supplies.
- Services of general insurance, servicing, repair, and maintenance in respect of motor vehicles which are used for the purposes specified above.
### Specific Conditions for ITC on Motor Vehicles
**Section 17(5) of the CGST Act, 2017:**
- **Motor Vehicles for Transportation of Persons:**
- ITC on motor vehicles for transportation of persons having a seating capacity of not more than 13 persons (including the driver) is blocked.
- ITC is allowed if the vehicle is used for further supply of such vehicles or conveyances, transportation of passengers, or imparting training on driving, flying, navigating such vehicles or conveyances.
- **Motor Vehicles for Transportation of Goods:**
- ITC is allowed on motor vehicles used for transportation of goods.
### Practical Application
1. **Business Use Vehicles:**
- If the vehicle is used for business purposes (e.g., company cars used by employees for official work, goods transport vehicles), you can claim ITC on spares, tyres, and insurance.
2. **Mixed Use Vehicles:**
- If the vehicle is used for both personal and business purposes, ITC can only be claimed proportionately to the extent of its use for business purposes.
3. **Personal Use Vehicles:**
- No ITC can be claimed if the vehicle is used for personal purposes.
### Examples
1. **Goods Transport Vehicle:**
- **Spares and Tyres:** ITC can be claimed.
- **Insurance:** ITC can be claimed if the vehicle is used for transportation of goods.
2. **Company Car:**
- **Spares and Tyres:** ITC can be claimed if the vehicle is used for business purposes.
- **Insurance:** ITC is generally blocked unless it is essential for the business and not covered under personal use.
### Conclusion
To summarize, you can claim ITC on vehicle expenses like spares and tyres if the vehicle is used for business purposes and not covered under the blocked credit category as per Section 17(5) of the CGST Act, 2017. For vehicle insurance, ITC is generally blocked unless the vehicle is used for making taxable supplies or other specified purposes. Always ensure compliance with the specific conditions outlined in the GST law and maintain proper documentation to substantiate your claims. For accurate application, consulting with a GST professional or tax advisor is recommended.
### Input Tax Credit on Vehicle Expenses
#### 1. **Spares and Tyres**
**Eligibility:**
- **For Business Purposes:** If the vehicle is used for business purposes, ITC on spares and tyres can be claimed provided the vehicle is not covered under the blocked credit category as per Section 17(5) of the CGST Act, 2017.
- **For Personal Use:** If the vehicle is used for personal purposes, ITC cannot be claimed.
**Blocked Credits:**
- ITC is not available for motor vehicles and conveyances unless they are used for:
- Making taxable supplies (e.g., for transportation of passengers, goods, or providing training on driving, flying, navigating such vehicles or conveyances).
- Transportation of goods.
#### 2. **Insurance**
**Eligibility:**
- ITC on vehicle insurance can be claimed if the vehicle is used for business purposes and is not covered under the blocked credit category. However, ITC on insurance is specifically blocked under Section 17(5) of the CGST Act unless certain conditions are met.
**Blocked Credits:**
- ITC on insurance for motor vehicles is blocked unless it pertains to:
- Vehicles used for making taxable supplies.
- Services of general insurance, servicing, repair, and maintenance in respect of motor vehicles which are used for the purposes specified above.
### Specific Conditions for ITC on Motor Vehicles
**Section 17(5) of the CGST Act, 2017:**
- **Motor Vehicles for Transportation of Persons:**
- ITC on motor vehicles for transportation of persons having a seating capacity of not more than 13 persons (including the driver) is blocked.
- ITC is allowed if the vehicle is used for further supply of such vehicles or conveyances, transportation of passengers, or imparting training on driving, flying, navigating such vehicles or conveyances.
- **Motor Vehicles for Transportation of Goods:**
- ITC is allowed on motor vehicles used for transportation of goods.
### Practical Application
1. **Business Use Vehicles:**
- If the vehicle is used for business purposes (e.g., company cars used by employees for official work, goods transport vehicles), you can claim ITC on spares, tyres, and insurance.
2. **Mixed Use Vehicles:**
- If the vehicle is used for both personal and business purposes, ITC can only be claimed proportionately to the extent of its use for business purposes.
3. **Personal Use Vehicles:**
- No ITC can be claimed if the vehicle is used for personal purposes.
### Examples
1. **Goods Transport Vehicle:**
- **Spares and Tyres:** ITC can be claimed.
- **Insurance:** ITC can be claimed if the vehicle is used for transportation of goods.
2. **Company Car:**
- **Spares and Tyres:** ITC can be claimed if the vehicle is used for business purposes.
- **Insurance:** ITC is generally blocked unless it is essential for the business and not covered under personal use.
### Conclusion
To summarize, you can claim ITC on vehicle expenses like spares and tyres if the vehicle is used for business purposes and not covered under the blocked credit category as per Section 17(5) of the CGST Act, 2017. For vehicle insurance, ITC is generally blocked unless the vehicle is used for making taxable supplies or other specified purposes. Always ensure compliance with the specific conditions outlined in the GST law and maintain proper documentation to substantiate your claims. For accurate application, consulting with a GST professional or tax advisor is recommended.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Section 270A penalty
- GST Registration Application -Rejected
- GSTR 9C- Table 9
- International transfer pricing- -> father entity vs son entity ->WHERE NO mutual say in management
- Tax liability on gift amount given to blood relation
- Gst registration rule 14A
- Query on solved queries
- Reimbursement of expense- GST applicable or not
- When was the effective CA partnership deed? Can I use old FRN until new FRN alloted by ICAI?
- Form 104 stamp paper deed
- PLACE OF SUPPLY FOR COMMISSION AGENT
- Transport service POS
- E INVOICE, E-WAY, INVOICE
- GST RATE ON CONSTRUCTION BRICKS ?
- To Whom the Invoice should be Raise to
- E stamp paper purchase
- Problem in filing Returns for International workers in EPFO
- Clarification for reversal of IGST on transfer of duty-free imported goods from EOU to DTA unit
- EXCESS CREDIT REALTED GST REVERSAL
- Export invoice not reported
Trending Online Classes
-
Live Course on GSTR 9 & 9C for FY 24-25(Detailed discussions, FAQ, Case studies and Live demo of GSTR 9/9C on GST Portal)
Industry Expert16 November 2025
CAclubindia
