CBIC Clarifies ITC Eligibility for Demo Vehicles Under GST Law

The Central Board of Indirect Taxes and Customs (CBIC) has clarified that automobile dealers can claim Input Tax Credit (ITC) on demonstration vehicles under GST law. However, dealers cannot claim ITC if demo cars are utilized for personal purposes or transportation of staff. Proper documentation and adherence to tax treatments are essential.

The Central Board of Indirect Taxes and Customs (CBIC) has issued a crucial clarification regarding Input Tax Credit (ITC) for automobile dealers, allowing ITC claims on demonstration (demo) vehicles under the GST law.

This development stipulates that demo cars used for promotional activities qualify for ITC, while those used for personal purposes or staff transportation do not.

The CBIC emphasizes the importance of documentation and appropriate tax handling, ensuring compliance and supporting legitimate business activities.

(With inputs from agencies.)