This trade circular clarifies the availability of input tax ...

Clarifying ITC eligibility for demo vehicles used by auto dealers.

Circulars GST - States

October 15, 2024

This trade circular clarifies the availability of input tax credit (ITC) on demo vehicles used by authorized dealers for motor vehicles. The key points are: ITC is available on demo vehicles used for promoting further supply of similar vehicles, as it falls under the exclusion in Section 17(5)(a)(A) of the WBGST Act. However, ITC is not available if demo vehicles are used for staff transportation or the dealer merely acts as an agent for the manufacturer. If demo vehicles are capitalized by dealers, ITC is available subject to Section 16(3) regarding depreciation claims under Income Tax Act. Upon subsequent sale of capitalized demo vehicles, dealers must pay tax u/s 18(6) and Rule 44(6) of WBGST Rules. The circular provides clarity on ITC eligibility for demo vehicles based on their usage and accounting treatment by authorized dealers.

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This trade circular clarifies the availability of input tax ...

Clarifying ITC eligibility for demo vehicles used by auto dealers.

Circulars GST - States

October 15, 2024

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