Good News for Businesses: GST Rules Allow ITC for Leased/Rented Vehicles for Mandatory Transport

• The applicant is engaged in providing IT-enabled support services in the healthcare sector in Tamil Nadu.

• Under the Tamil Nadu Shops and Establishment Act, 1947 and its rules, it is mandatory for the applicant to provide transportation facilities with adequate safety protection for women employees working in shifts and arriving or leaving the workplace between 8 pm and 6 am.

• In compliance with this mandate, the applicant procures leasing/renting and hiring of motor vehicles for passenger transportation and provides these vehicles exclusively to women employees.

• The transportation services are not available to outsiders; they are exclusively provided to women employees.

• Section 17(5) of the GST law blocks Input Tax Credit (ITC) on motor vehicles used for the transport of passengers with an approved seating capacity of not more than thirteen persons (including the driver).

• However, in this specific case, since there is a legal mandate for the applicant to provide transportation services to women employees during specified hours, the applicant is entitled to claim ITC on the tax paid for leasing/renting and hiring of motor vehicles used exclusively to transport women employees arriving or leaving the workplace between 8 pm and 6 am.

• This entitlement is in accordance with Notification No. 2/2019-Central Tax dated 28-5-2019. AUTHORITY FOR ADVANCE RULINGS, TAMILNADU vs. Access Healthcare Services (P.) Ltd.