Dear SIr/ Ma'm
A client of mine has been running a business (Propritory Ship) under the name HYDERABAD AGENCIES. he is filing the returns of Hyderabad Agencies under the his Name XYZ. Recently he had puchased a car on his name XYZ and paid Car Insurance.
Can he avail ITC on the Car Insurance paid?
ITC will be available if the car is used solely for the purpose of business, otherwise proportionate amount of ITC will have to be reversed.
ITC on Insurance of Motor vehicles other than transport vehicle is not allowed.ITC is restricted u/s. 17(5).
Sir, section 17(5) restricts ITC on motor vehicle but does not specifically includes car insurance too. As per my view car insurance is just like insurance on any other machinery and should be allowed.
ITC may not be allowed. As Input credit on motor vehicle is specifically excluded, so any other input arising due to motor vehicle like insurance, repairs, servicing, etc shall not be available. This is not properly clarified in law. This is a debatable issue.
CAclubindia
