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)

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)

19 April 2024 No, If the business is not a transport or travelling industry.

Nikhil Kaushik

Nikhil Kaushik (Expert)

19 April 2024 ITC is available only for vehicles with capacity less than 13.

RAJA P M

RAJA P M (Expert)

19 April 2024 That's available only for Travelling business. Not for other than traveling.

Nikhil Kaushik

Nikhil Kaushik (Expert)

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)

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)

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)

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)

19 April 2024 you will figure it out. I am sure.

Gopalakrishnan. S

Gopalakrishnan. S (Querist)

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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