ITC on purchase of car - Reg.

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This discussion clarifies whether Input Tax Credit (ITC) can be claimed on the purchase of a new car for business purposes under GST. Generally, ITC is not available for cars unless the business is in the transport or travelling industry. There's a specific mention that vehicles with a seating capacity exceeding 12 might be an exception, but the primary consensus is that for most businesses, ITC on car purchases is disallowed.

Gopalakrishnan. S

Gopalakrishnan. S (Querist)
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19 April 2024 Sir

Can we avail ITC on purchase of new car, which has been bought by a Proprietor on his business name and used for business purposes ?

Please advice.

RAJA P M

RAJA P M (Expert)
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19 April 2024 No, If the business is not a transport or travelling industry.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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19 April 2024 ITC is available only for vehicles with capacity less than 13.

RAJA P M

RAJA P M (Expert)
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19 April 2024 That's available only for Travelling business. Not for other than traveling.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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19 April 2024 Raja. Not exactly. if the sitting capacity is more than 12, then input is available without any restriction.

RAJA P M

RAJA P M (Expert)
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19 April 2024 *Mr Nikhil Kaushik please show thaat details...
It's for used in furtherance of business like transport/ travelling business. Not available for any other business.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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19 April 2024 just read the basic section. See what is disallowed and then see if a vehicle has more than 12 seating capacity, where is the disallowance! in such cases, it often helps to make a flow chart of what is allowed and what is not allowed. don't go by headline items. read the act.

RAJA P M

RAJA P M (Expert)
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19 April 2024 Please go through the following link. You can get some clarity about ITC for purchase of vehicle.
https://taxguru.in/goods-and-service-tax/itc-motor-vehicles-gst-analysis.html.

It's not only in headline items...

Nikhil Kaushik

Nikhil Kaushik (Expert)
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19 April 2024 you will figure it out. I am sure.

Gopalakrishnan. S

Gopalakrishnan. S (Querist)
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20 April 2024 Dear Experts, Mr. Nikhil Kaushik and Mr. Raja P M, thanks a lot for your clarifications and dedicated explanations. Most informative. Once again, thanks a lot.

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