Stories
GST Council to Consider Easing Input Tax Credit on Vehicles Up to 13 Seats
M
Moneycontrol•06-10-2026, 11:52
GST Council to Consider Easing Input Tax Credit on Vehicles Up to 13 Seats
- •The GST Council is set to consider relaxing Input Tax Credit restrictions on passenger motor vehicles with a seating capacity of up to 13 persons, including electric vehicles, during its upcoming meeting on October 7.
- •If approved, amendments to Section 17(5) of the CGST Act will allow businesses to claim ITC on vehicle purchases, leasing, insurance, servicing, and repairs.
- •Passenger transport and vehicle rental operators may be given the option to choose between a 5 percent GST levy with restricted ITC and an 18 percent levy with full ITC.
- •The proposal aims to lower operating costs for corporate fleets and establish tax parity between conventional internal combustion engine vehicles and electric vehicles.
- •Tax experts note that while the move provides regulatory certainty and flexibility for businesses, it could create a short-term dent in government tax collections.
Key Questions Answered
The GST Council is considering easing Input Tax Credit restrictions on passenger motor vehicles with a seating capacity of up to 13 persons, including electric vehicles, to cover procurement, leasing, and running expenses like insurance, servicing, and repairs.
Operators may be given the choice between a 5 percent GST levy with restricted input tax credit and an 18 percent levy with full input tax credit availability for both conventional and electric vehicles.
Under Section 17 of the CGST Act, input tax credit is blocked for general businesses on passenger motor vehicles seating up to 13 persons, with the restriction applying strictly based on seating capacity without making any exceptions for engine types like electric vehicles.
