Input Tax Credit on Car Purchase Under GST

Getting a car is everyone's dream and even when buying a new car you have to pay GST.

Now if there is an expensive car, GST also goes into a few lakhs.

In this case, most car dealers say when buying a car that if you have a GST number, you can take this paid GST credit.

So the following information is useful for those who want to buy such a car & then you decide if you can take a paid GST credit when buying a car?

As per section 17(5) of the CGST Act, the input tax credit will not be available in respect of motor vehicles and other conveyances, except when:

• Supply of other vehicles or conveyances.

• Transportation of passengers.

• Imparting training on driving, flying, navigating such vehicles or conveyances.

• Transportation of goods.

Hence, if your firm does a business that falls under any of the categories mentioned above, it can claim the input tax credit.

Remember, both input tax credit of GST paid on the purchase of such capital goods and depreciation u/s Income Tax Act 1961 will not be allowed together. You can either claim an input tax credit of GST or depreciation u/s Income Tax Act 1961.