UTILISATION OF ITC ON PURCHASE OF COMMERCIAL VEHICLE

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This query is : Resolved

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This discussion clarifies the rules for claiming Input Tax Credit (ITC) on the purchase of commercial vehicles for Goods Transport Agencies operating under the forward charge mechanism. It confirms that the full ITC can be claimed in the month of purchase, not split over five years. Furthermore, the ITC can be utilised against normal output tax liabilities, such as transportation charges, in the same month.

Shalini RN

Shalini RN (Querist)
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11 January 2023 We are registered Goods Transport Agency who have opted for Forward Charge Mechanism. We purchased two new commercial Vehicles for transport of goods in the month of November 2022. We claimed the full amount as ITC in the same month. My queries are -
1. Can ITC on purchase of commercial vehicle used for transport of vehicle be utilized fully in the same month of purchase or it needs to be split for 5 years?
2. If it needs to split for 5 years, how can we reverse the ITC Claimed in the November month in December GSTR 3B
3. Is there a rule whether we have to use the ITC on purchase of commercial vehicles must be utilized for sale of old commercial Vehicles or it can be utilized against normal output tax (in our case - transportation charges) in that particular month.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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12 January 2023 1 As per Rule 43 of CGST Rules, you need to avail input tax credit on purchase of capital goods in the same month of purchase. There is no provision in GST rules, to avail or carry forward ITC for a period of 5 years.
2 Doesn't apply.
3 It can be utilized against normal output tax (in your case - transportation charges) in that particular month.

Shalini RN

Shalini RN (Querist)
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12 January 2023 THANK YOU VERY MUCH SIR

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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12 January 2023 You are welcome......

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