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Regarding ITC on motor vehicle

ITC is allowed when car is purchased by a company for taxable supply of transportation of passengers...My question is 1. Car is purchased by a registered person for Renting out that car for taxable supply of transportation of passenger...ITC allowed or not ?? 2. Car is purchased by a company for taxable supply of transportation of their employees ...ITC allowed or not


surya rajan

surya rajan

CA Inter

5K+

04-Feb-21 08:37

15

Answers (6)

(1) No (2) Yes if its obligatory for the employer to provide such transportation


sudha reddy

sudha reddy

Moderator

05-Feb-21 11:19

(1) No (2) Yes if its obligatory for the employer to provide such transportation

In Both the cases they give services on taxable supply of transportation of passenger...then why ITC not allowed??


surya rajan

surya rajan

CA Inter

5K+

05-Feb-21 11:25

In Both the cases they give services on taxable supply of transportation of passenger...then why ITC not allowed??

2nd scenarion: Generally ITC is not available for rent-a-cab, health insurance and life insurance. However, the following is an exception, i.e., ITC is available for- Any services which are made obligatory for an employer to provide its employee by the Indian Government under any current law in force For example, assuming the government passes a rule for all employers to provide mandatory cab services to female staff in night shifts. ABC Ltd. hires a rent-a-cab to provide to transportation to its female staff on night shifts. Then ITC will be available to ABC Ltd. on the GST paid to the rent-a-cab service.


sudha reddy

sudha reddy

Moderator

05-Feb-21 18:11

In Both the cases they give services on taxable supply of transportation of passenger...then why ITC not allowed??

In 1st scenario: If you are providing transportation of passengers then ITC will be allowed on the vehicle purchased. but will be allowed for person providing transportation of passengers. But not for person giving vehicle on hire to a person who provides supply of transportation of passenger


sudha reddy

sudha reddy

Moderator

05-Feb-21 18:12