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ITC on car insurance premium


Vikas Mahajan   07 May 2018

Vikas Mahajan

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i have a car on my business name which is sole proprietorship ( manufacturing business)and can i avail input tax credit on gst paid on the insurance premium of the car

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Nageswara Rao Kasthuri (Asst. Manager - Accounts and Taxation)     07 May 2018

Nageswara Rao Kasthuri
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read section 17 (5)

Vikas Mahajan   07 May 2018

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but that section only describe the itc on purchase of vehicles and conveyance but not describe the services which we availed in subsequent years like insurance premium.

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Nageswara Rao Kasthuri (Asst. Manager - Accounts and Taxation)     07 May 2018

Nageswara Rao Kasthuri
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section 17 (5) (b) (iii)

Vikas Mahajan   07 May 2018

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this section also specifies health insurance and life insurance (not general insurance)

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Nageswara Rao Kasthuri (Asst. Manager - Accounts and Taxation)     07 May 2018

Nageswara Rao Kasthuri
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I think now you got clarification, hence, you can take ITC.

Vikas Mahajan   07 May 2018

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ok thanks

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CA Sunil (Internal Auditor)     07 May 2018

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Clause (a) to section 17 (5 ) , declares motor vehicles and  other conveyances  as blocked credit,  subject to certain exceptions. Accordingly no ITC is available in respect of motor vehicles

If you are into the business of renting / leasing car/ Conveyence / Training ----> Yes can claim ITC input credit on both car and Insurance premium.

However if you are in some other business, where the car is used for furtherance of business ----> you cannot claim ITC on Car only, but ITC on insurance & other accessories is not blocked.

Therefore there is no restriction on ITC towrds Insurance paid .so you can claim ITC on insurance premium..

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Madhukar N Hiregange (Chartered Accountant)     07 May 2018

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Section 17(5) states that ITC is not available specifically for motor vehicles ( other than for sale further ( lease could be covered here?) , transportation of passenger ( rent a cab, stage carrier, contract carrier etc), imparting training.

Insurance, repair, spares purchase are not specifically barred and therefore available due to reason that if ITC in relation to MV is would be barred- However in 17 (5) it is in respect of which is legally read as only or narrow meaning. ITC available.

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Pankaj Rawat (GST Practitioner)     07 May 2018

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Agree with CA Sunil
the phrase "shall not be , In Respect of "
means in regard to

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