ITC on rental charges of cabs for employees

No available

blocked under 17(5)(b)(i) of CGST Act

Renting a vehicle and re-renting to employees:
• If the company hires a vehicle and provides it to employees (personal use), ITC on rent-a-cab (17(5)(b)(iii)) is blocked, unless obligatory under law, or if the company is in the same line of business and makes an outward taxable supply of the same category.
• If the company charges employees for using the cab (an outward taxable supply of the same category, renting of a motor vehicle), the "same category" exception may allow ITC. Advance rulings are mixed where the employer recovers costs from employees and pays GST on the recovery. Facts matter.
• Recovering from employees (and charging GST) to unlock ITC is tax-neutral at best.