Itc on bus hire

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The amendment to Section 17(5) of the CGST Act 2017 regarding Input Tax Credit (ITC) on bus hire is effective from 1st February 2019, not retrospectively. While ITC on motor vehicles for passenger transport was restricted before this date, it is now allowed for leasing, renting, or hiring vehicles with a seating capacity exceeding thirteen persons. Office staff using company-provided buses are considered passengers under this amendment.

Manoj

Manoj (Querist)
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22 November 2022 Is amendment to section 17(5) of cgst act 2017 giving restriction to avaling ITC in respect of gst charged on hiring effective from 01.02.2019 only or retrospectively from 1st july 2017.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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23 November 2022 Section 17 (5) had clearly debarred Input Tax Credit on motor vehicles or conveyances used in transport of passengers till the date of the amendment i.e. 01.02.2019.
However with effect from 01.02.2019, Input Tax Credit has been allowed on leasing, renting or hiring of motor vehicles, for transportation of persons, having approved seating capacity of more than thirteen persons.

Manoj

Manoj (Querist)
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24 November 2022 Thanks sir. One of the Exception, viz, (B) given to section 17(5)(a) in which case ITC can be availed is 'transportation of passengers'. Which are the passengers referred to? Whether office staff using buses provided by company does not come under this category of passenger?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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24 November 2022 The passengers referred herein is carrying capacity of the bus as per motor vehicle act. It can be any.