Demo Motor Vehicles not eligible for GST ITC on Inward Supply: AAAR Shuns Maruti, Bajaj, KTM & Chetak Dealership

The Appellate Authority for Advance Ruling (AAAR) ruled that demo motor vehicles cannot be eligible for GST Input Tax Credit (ITC) on inward supply for dealerships of Maruti, Bajaj, KTM, and Chetak. The ruling clarifies that demo vehicles, though used for showcasing purposes, are not considered for ITC as they do not meet the definition of “business use” under GST laws. This decision has significant implications for automobile dealers, who typically used ITC on vehicles intended for demonstration. Dealers will now have to reevaluate their tax strategies and ensure compliance with the new ruling.