Question

Is ITC on repair and insurance of passenger car (used for business purpose) eligible? I understand that there are some changes passed by the Lok Sabha recently in this regard. What is the position of ITC before and after those amendments?

Answer

The ITC is restricted under section 17 of CGST Act. Section 17(5)(a) specifically restricts ITC on motor vehicles and other conveyances except when they are used

(i) for making the following taxable supplies, namely:
    (A) further supply of such vehicles or conveyances ; or
    (B) transportation of passengers; or
    (C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods

From the question it seems that you are not providing the above said services therefore ITC is not available on repair and insurance of passenger car.

Press release dated 21-7-2018 vide s.no. 9 has widened the scope of ITC that ITC would now be available in respect of following:
a. Most of the activities or transactions specified in Schedule III;
b. Motor vehicles for transportation of persons having seating capacity of more than thirteen (including driver), vessels and aircraft;
c. Motor vehicles for transportation of money for or by a banking company or financial institution;
d. Services of general insurance, repair and maintenance in respect of motor vehicles, vessels and aircraft on which credit is available; and e. Goods or services
which are obligatory for an employer to provide to its employees, under any law for the time being in force.
However till now the same has not been notified by CBIC. It will become effective only from the date of Notification. (Reply dt.05/12/2018)