Motor Vehicle/BikesITC Eligibility and Restrictions CMA Sudha Rani V, dated 10 June, 2020

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The Tax Publishers GST--ITC Motor Vehicle/Bikes--ITC Eligibility and Restrictions CMA Sudha Rani V It is a common practice to purchase Motor Vehicle for business purpose. Whether all registered persons under GST are eligible to avail the credit?Are there any restrictions on availment of credit on motor vehicle/bikes? This issue is being discussed by the author in the present write up. Section 16(1) of the CGST Act provides the eligibility for availing Input Tax Credit(ITC) whereas Section 17(5) of CGST Act provides blocked credits. Section 16(1) of CGST Act states that every registered person shall be entitled to take credit of input tax credit charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. It is clear that credit may be availed on tax charged on any supply of goods or services or both to him and the purpose of such goods or services or both shall be :-- n used in the course of his business; or n used in furtherance of his business; or n intended to be used in the course of his business; or n intended to be used in furtherance of his business; or 1. Conditions for availing ITC n The registered person should be in possession of tax invoice or debit note or any other tax paying document issued by a supplier; n The registered person should have received the goods or services or both; It is deemed that registered person has received the goods when he directs the supplier to deliver the goods to any other person. n The tax charged on such supply has been actually paid to the government either in cash or through utilization of input tax credit; and n The taxable person should have furnished the return. 2. Time Limit for availing credit Registered person is entitled to avail input tax credit on or before the due date of the return of September following the end of financial year to which such invoice relates or till the date of filing relevant annual return related to such invoice, whichever is earlier. In simple words, registered person cannot avail ITC of this financial year, after the due date of September of next financial year. If annual return is filed before September of next financial year then ITC cannot be availed after the date of filing annual return. 3. Conditions and restrictions on ITC Section 17(5) of CGST Act blocks or restricts the credit irrespective of whether the goods or services or both used or intended to be used in the course or futherance of business. Following is the extract :-- SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--ITC

Motor Vehicle/Bikes--ITC Eligibility and Restrictions

CMA Sudha Rani V

It is a common practice to purchase Motor Vehicle for business purpose. Whether all registered persons under GST are eligible to avail the credit?Are there any restrictions on availment of credit on motor vehicle/bikes? This issue is being discussed by the author in the present write up.

Section 16(1) of the CGST Act provides the eligibility for availing Input Tax Credit(ITC) whereas Section 17(5) of CGST Act provides blocked credits.

Section 16(1) of CGST Act states that every registered person shall be entitled to take credit of input tax credit charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business.

It is clear that credit may be availed on tax charged on any supply of goods or services or both to him and the purpose of such goods or services or both shall be :--

n used in the course of his business; or

n used in furtherance of his business; or

n intended to be used in the course of his business; or

n intended to be used in furtherance of his business; or

1. Conditions for availing ITC

n The registered person should be in possession of tax invoice or debit note or any other tax paying document issued by a supplier;

n The registered person should have received the goods or services or both; It is deemed that registered person has received the goods when he directs the supplier to deliver the goods to any other person.

n The tax charged on such supply has been actually paid to the government either in cash or through utilization of input tax credit; and

n The taxable person should have furnished the return.

2. Time Limit for availing credit

Registered person is entitled to avail input tax credit on or before the due date of the return of September following the end of financial year to which such invoice relates or till the date of filing relevant annual return related to such invoice, whichever is earlier. In simple words, registered person cannot avail ITC of this financial year, after the due date of September of next financial year. If annual return is filed before September of next financial year then ITC cannot be availed after the date of filing annual return.

3. Conditions and restrictions on ITC

Section 17(5) of CGST Act blocks or restricts the credit irrespective of whether the goods or services or both used or intended to be used in the course or futherance of business. Following is the extract :--