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Can You Claim GST Credit on Car Purchase in India?

When fulfilling the dream of owning a car, GST is an inevitable part of the equation. Whether you're eyeing a budget-friendly option or a high-end vehicle, GST adds a significant cost to your purchase. Many car dealers suggest that having a GST number allows you to claim credit for the GST paid during the car's purchase. But is this really the case? Let's delve into the details to clarify this matter.

Understanding GST Credit on Car Purchase:

According to Section 17(5) of the CGST Act, input tax credit isn't available for motor vehicles and other vehicles, except for specific circumstances:

A) Supply of Other Vehicles or Transport: If your business involves the supply of other vehicles or transportation services, you may be eligible to claim input tax credit.

B) Passenger Transport: Companies engaged in passenger transport services can also potentially claim this credit.

C) Training Services: If your business provides training in driving or flying using such vehicles or transport, you might qualify for input tax credit.

D) Transportation of Goods: If your business primarily deals with the transportation of goods, you could be eligible to claim this credit.

However, it's important to note that you cannot combine the input tax credit of GST paid on purchasing such capital goods with depreciation under the Income-tax Act, of 1961. You must choose either to claim the input tax credit of GST or deduct it under the Income Tax Act, of 1961.

In Summary:

If your business doesn't fall into any of the categories mentioned above, you may not be able to claim GST input tax credit for your car purchase. It's essential to understand these regulations before assuming you can benefit from GST credit when buying a car.

For expert advice and assistance with tax matters, you can contact Alliance Tax Experts today. #AllianceTaxExperts #TaxConsultant #ITCOnGST #GSTExperts #SantoshPatil #CarPurchase #GSTCredit