Question68:One of my client does business as tour operator as well as advertisement agent. He sales tour packages. He purchase a bus his business activities. Can he claim ITC of bus (Capital Goods)'

Answer Section 17(5)(a) of CGST Act, restrict av-ailment of ITC on purchase of motor vehicle. But the ITC available on motor vehicle when the same is used for transportation of passenger. So you will be eligible for ITC on bus.

Section 17(5)(a) is reproduced below:-

(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:'
(a) 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; (REPLY dt. 01-03-2018)