Input tax credit on motor vehicles for transport of persons with seating up to 13 (including the driver) is blocked under Section 17(5)(a), except when used for further supply of vehicles, transport of passengers, or driving training. Vehicles with more than 13 seats and goods-transport vehicles are generally eligible.
The general bar
Section 17(5)(a) blocks ITC on motor vehicles for the transport of persons with an approved seating capacity of up to 13 persons (including the driver). So a car bought by a consultancy, manufacturer or trading firm for staff use carries blocked GST — the tax is an expense.
The exceptions
| Use of the vehicle | ITC |
|---|---|
| Further supply of such vehicles (dealer) | Allowed |
| Transport of passengers (cab/bus operator) | Allowed |
| Imparting driving training | Allowed |
| Vehicles with more than 13 seats | Allowed |
| Goods transport vehicles (trucks, tempos) | Allowed |
Insurance, repairs and servicing
ITC on general insurance, servicing, repairs and maintenance of a motor vehicle follows the vehicle: if the vehicle's ITC is blocked, ITC on its insurance and repairs is also blocked under Section 17(5)(ab) (with the same exceptions). Where the vehicle is eligible (e.g. a cab operator), the related insurance and repair ITC is also available.
Practical points
- Map vehicle-related GL codes to blocked status unless the business is in an exception category.
- For goods-transport vehicles used in business, claim the ITC — it is not blocked.
- Document the vehicle's seating capacity and use to support any claim.
- See the wider Section 17(5) blocked-credit list.
Key takeaways
- Passenger vehicles up to 13 seats: ITC blocked (Section 17(5)(a)).
- Exceptions: resale, passenger transport, driving training.
- Vehicles over 13 seats and goods vehicles: ITC allowed.
- Insurance/repair ITC follows the vehicle's eligibility.