A lot of car dealers get this question from their customers, what is the GST provision on the credit admissibility on purchase of a motor vehicle and the repairs done on it?
From the customer’s point of view, section 17 (5) of CGST Act clearly states, if a motor vehicle has a capacity of fewer than 14 people, then you cannot claim Input Tax Credit of the purchase. Unless you are a motor vehicle dealer, a motor vehicle driving school or a transporter of passengers. Only these 3 class of buyers can claim ITC on purchase of motor vehicle.
ITC on repairs of motor vehicle was allowed till 31.01.2019, however with clear amendment in section 17 (5), ITC of repairs is also allowed only to the above mentioned 3 categories of recipient, i.e. a motor vehicle dealer, a motor vehicle driving school or a transporter of passengers. While people could avail credit on repair expenses, after said amendment from Feb 2019 those rights have been revoked and strictly limited to only those discussed above.