Question
Whether a travel agency firm registered under GST providing package tours and charging 5% GST. The firm has purchased a bus to be used in its business. Whether ITC would be allowed. Pl. cite the relevant notification and Section under GST laws.
Answer
We understood that your services is classified under heading 23(i) of Notification No. 08/2017- Integrated Tax (Rate) which is reproduced as follows:
| 23. Heading 9985 (Support services) | ||
|
(i) Supply of tour operators services. Explanation.- "tour operator" means any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours. |
5 |
1. Provided that credit of input tax
charged on goods and services used in supplying the service other than
the input tax credit of input service in the same line of business (i.e.
tour operator service procured from another tour operator) has not been
taken [Please refer to Explanation no. (iv)] 2. The bill issued for supply of this service indicates that it is inclusive of charges of accommodation and transportation required for such a tour and the amount charged in the bill is the gross amount charged for such a tour including the charges of accommodation and transportation required for such a tour. |
Where Explanation (iv) is as follows:
(iv) Wherever a rate has been prescribed in this notification subject to the
condition that credit of input tax charged on goods or services used in
supplying the service has not been taken, it shall mean that,-
(a) credit of input tax charged on goods or services used exclusively in
supplying such service has not been taken; and
(b) credit of input tax charged on goods or services used partly for supplying
such service and partly for effecting other supplies eligible for input tax
credits, is reversed as if supply of such service is an exempt supply and
attracts provisions of clause (iv) of section 20 of the Integrated Goods and
Services Tax Act, 2017 read with sub-section (2) of section 17 of the Central
Goods and Services Tax Act, 2017 and the rules made thereunder.
As there is a specified condition that ITC on goods and services cannot be
taken. Therefore, no ITC is allowed on bus purchased. (Reply
dt.18/08/2018)