Itc under gst on insurance premium paid for vehicles

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 April 2018 Is there any availaiblity of ITC for GST paid on insurance premium of vehicles purchased new.Under which section and rules.

Querist : Anonymous

Querist : Anonymous (Querist)

24 April 2018 Pls give reply immediately

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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09 July 2024 Under GST (Goods and Services Tax) law in India, Input Tax Credit (ITC) can generally be claimed on goods and services used or intended to be used in the course or furtherance of business. However, there are specific rules and conditions governing the eligibility of ITC, including certain restrictions and exceptions.

### Availability of ITC on Insurance Premium for Vehicles:

1. **General Rule**: GST paid on insurance premiums for vehicles can be eligible for ITC if the vehicles are used for business purposes. This includes vehicles used for transportation of goods, providing services, or any other business activity.

2. **Section 17(5)(d) of CGST Act**: According to Section 17(5)(d) of the CGST Act, 2017, ITC is not available on goods or services received by a taxable person for construction of an immovable property (other than plant and machinery) or for motor vehicles and other conveyances. However, this restriction applies if the motor vehicles are used primarily for personal use or for activities not related to business.

3. **Exceptions**: There are exceptions to the restriction under Section 17(5)(d):
- If the motor vehicles are used for providing taxable services of transportation of passengers or goods.
- If the motor vehicles are used for imparting training on driving, flying, navigating such vehicles or transportation of goods.

4. **Rule 8 of ITC Rules, 2017**: Rule 8 of the Input Tax Credit Rules, 2017 specifies the conditions under which ITC can be availed. It includes provisions related to goods and services used for business purposes and those specifically excluded.

### Practical Application:

- **Business Use**: If the vehicles are used predominantly for business purposes (e.g., transportation of goods, providing services), GST paid on insurance premiums can be considered eligible for ITC.

- **Documentation**: Ensure that proper documentation, such as invoices for insurance premiums and usage logs showing business use of vehicles, is maintained to substantiate the claim of ITC during GST audits.

- **Section 16 of CGST Act**: Section 16 of the CGST Act provides for conditions under which ITC can be claimed, including possession of tax invoice, receipt of goods or services, and payment of tax.

### Conclusion:

In summary, GST paid on insurance premiums for vehicles can generally be eligible for Input Tax Credit if the vehicles are used for business purposes. However, it's essential to consider the specific provisions under Section 17(5)(d) and Rule 8 of the CGST Act and ITC Rules, and ensure compliance with the conditions therein. Keeping detailed records and consulting with a GST professional can help in correctly claiming and substantiating ITC on insurance premiums for vehicles under GST.

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