Dear Experts
Kindly opine on below.
FACTS
Mr.A is dealing in second hand cars where he buys the second hand car and incur expenses on repairs, denting, painting etc to improve the condition of the car and also he incurs expenses on social media advertising to sell the cars.
Mr. A is registered under GST where he follows margin scheme to pay GST and he is paying GST @ 18% on difference between sale price and purchase price.
Question.
1-Can Mr.A claim the ITC on Advertising expenses to pay the GST under margin scheme??
2- Can Mr.A claim the ITC on expenses like denting, painting & repair which is incurred to improve the condition of cars.??
kindly share your detailed views.
thanks
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ITC Claim in case of margin Scheme
Replies (1)
1 & 2 -> Yes.
Rule 32(5) restricts Input Tax Credit availment only on the purchase of second-hand goods, which are further sold under margin scheme. Hence, Input tax credit can be availed on all business expenses like rent, advertisement, commission, professional expenses, etc. (other than purchases of second-hand goods) subject to the basic conditions of Input Tax Credit availment specified in Section 16 to 21 and Rules 36 to 45.
[ GST AAR Karnataka in Advance Ruling No. KAR ADRG 40/2022 Re: Attica Gold Pvt. Ltd. ]
Rule 32(5) restricts Input Tax Credit availment only on the purchase of second-hand goods, which are further sold under margin scheme. Hence, Input tax credit can be availed on all business expenses like rent, advertisement, commission, professional expenses, etc. (other than purchases of second-hand goods) subject to the basic conditions of Input Tax Credit availment specified in Section 16 to 21 and Rules 36 to 45.
[ GST AAR Karnataka in Advance Ruling No. KAR ADRG 40/2022 Re: Attica Gold Pvt. Ltd. ]
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