ITC cannot be claimed on IE that are used for personal consumption or for non-business purposes. For example, if you purchase a car for personal use, you cannot claim ITC on the GST paid on the car.
ITC CANNOT BE CLAIMED ON IE
The Maharashtra Authority of Advance Ruling (AAR) ruled that Input Tax Credit cannot be claimed on Indirect Expenses like rent, commission, professional fees, telephone incurred for purpose of business.
The applicant, Deccan Wheels purchases second-hand cars (goods) and after minor processing on it such as change of tires, change of battery, painting, denting, repairs, servicing, internal cleaning, polishing, etc, which does not change the nature of the goods, the said goods are sold.
The applicant does not claim the Input tax credit on the purchase of second-hand goods and has opted for Margin Scheme and applies GST rate as per Notification No 8/2018- Central Tax (Rate) dt 25/01/2018.
The applicant has sought the advance ruling on whether Input Tax Credit can be claimed on other indirect expenses incurred for the purpose of business such as rent, commission, professional fees, telephone etc. The Coram of Rajiv Magoo and T.R.Ramnani observed that the concessional rate under the notification shall not apply, if the supplier of such goods has availed input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT as defined in CENVAT Credit Rules, 2004 or the input tax credit of Value Added Tax or any other taxes paid, on such goods.
In other words, since the applicant has been availing the benefit of the said notification and paying GST at a concessional rate, they shall not avail Input Tax Credit, as queried. Subscribe Tax scan Ad Free to view the Judgment.