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Input Tax on innova vehicle

Chandrasekhar (Accountant) (59 Points)

20 July 2020

sir, we have purchased one innova vehicle for shifting of our tools one place to another place for testing of power Transformers.
shall I take input tax credits or not.
pls clarify

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6 Replies

CA Altamush Zafar (GST Consultant) (15907 Points)
Replied 20 July 2020

If Innova car is modified for transportation then there is a chance of taking ITC otherwise ITC not available

1 Like

CA Surjeet Negi (Indirect Tax- Consultant) (50 Points)
Replied 20 July 2020

ITC on hiring motor vehicle is blocked under section 17(5) of cgst act, the same are not allowed.

1 Like

Vijayprakash P (1313 Points)
Replied 20 July 2020

Input tax credit is available only when the purchase made is used in the course or furtherance of business. Where any inward supply of goods or services made, to be used partly for business and partly for personal purpose. ITC would be available only to the extent of amount of tax paid on inward supplies being used for business purpose.

1 Like

CA ABHAY GUPTA (Practice) (3230 Points)
Replied 20 July 2020

The Motor vehicle should be purchased should be used or intended to be used in the course or furtherance of the business. Any ITC used in connection with purpose other than business, then it is not allowed.

1 Like

Shivam RC (Student) (23683 Points)
Replied 20 July 2020

Generally ITC on Motor Vehicles is specifically BLOCKED under Section 17(5) of the CGST Act 2017. But there are some exceptions to this Provision like if the Motor Vehicle is used for Transportation of Goods, then ITC is available.

But in your case it will not be correct to claim ITC since you are not exclusively using the Toyota Innova for transportation of goods ( stock in trade ). Transportation of tools from one site to another cannot be the ground to claim ITC.

Even if you claim ITC now, then what will be your stance if there is a Departmental Enquiry / Audit in the future and the department asks you "How many E-way Bills have been generated with respect to the Toyota Innova ??? "

So as per my view you cannot claim ITC on Toyota Innova since the car ( innova ) was not built for transportation of goods.

On the other hand, If you buy a Tata Ace ( in local language we call it as CHOTA HATI ) and the same is being used for transportation of goods , then without any fear you can claim ITC since it's a commercial vehicle which is specifically used for transportation of goods in smaller quantities.

Disclaimer : I have given my personal opinion / advise to you regarding this matter. This is not a Professional Advice. So it's better to confirm it with other members of the group.

Regards,
Shivam RC.

4 Like