Through CGST Amendment Act 2018, the law on this point has been amended by inserting clause (ab) to Sec. 17(5) to specifically deal with the matter. The meaning and purport of this new clause is that ITC in respect of services of general insurance, servicing, repair and maintenance related to a motor vehicle is now specifically in the blocked credit category, if such motor vehicle is –
- for transportation of persons and
- having approved seating capacity of not more than thirteen persons (including the
Driver).
Cases where ITC on motor vehicle repairing/ insurance services is available even after amendment
A careful reading of amended law gives us following situations where ITC on repairing/ insurance services of motor vehicle is still available (subject to, of course, fulfillment of other basic conditions for AVAILABLE of any ITC).
- Motor Vehicle for transportation of persons having approved seating capacity of more than 13 persons. (e.g. A Bus)
- Motor Vehicle for transportation of goods. (e.g. A Truck)
- Motor Vehicle used for making following taxable supplies, namely:—
(A) Further supply of such motor vehicles (e.g. In case of a Car Dealer)
(B) Transportation of passengers (e.g. In case of a Taxi Service Provider)
(C) Imparting training on driving such motor vehicles (e.g. in case of a Driving School)
- Services received by a taxable person engaged—
(I) in the manufacture of such motor vehicles––
(II) in the supply of general insurance services in respect of such motor vehicles insured by him;
Thus in all other cases apart from above 4, INPUT TAX CREDIT in respect of repairs/ insurance of motor vehicle is not available on and after 01/02/2019.
