Automobile Dealership Entitled to Avail GST ITC on Inward Supply of Demo Vehicles when Depreciation not Claimed: AAR

The Kerala Authority for Advance Ruling (AAR) has ruled that automobile dealerships are entitled to avail GST Input Tax Credit (ITC) on the inward supply of demo vehicles, provided depreciation is not claimed on these vehicles. The ruling clarifies that demo vehicles, initially used for demonstration purposes, do not lose their eligibility for ITC if they are subsequently sold as second-hand cars. This decision is significant for automobile dealerships as it allows them to claim ITC on demo vehicles, which are essential for their business operations. The AAR emphasized that the eligibility for ITC is contingent upon not claiming depreciation on the tax component of these vehicles. This ruling provides clarity on the treatment of demo vehicles under the GST framework and helps dealerships manage their tax liabilities more effectively. It also underscores the importance of adhering to GST regulations to maximize tax benefits.