Question

I am providing Transportation of passenger services through contract carriage with the company and charging 18% GST. I am taking credit of all inputs and inputs services. Now, I want to buy a new bus for contract carriage can I avail the credit purchase of new vehicle which is solely used for above contract. ?

Answer

The ITC is restricted under section 17 of CGST Act. Section 17(5)(a) specifically restricts ITC on motor vehicles and other conveyances except when they are used

(i) for making the following taxable supplies, namely:
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods

As you are providing service of transportation of passengers which is specifically covered under the exceptions, therefore you are eligible to avail credit on purchase of new vehicle. (Reply dt.16/11/2018)