Input Tax Credit — In the instant application, the applicant is a registered taxpayer and has entered into agreement for hiring commercially licensed vehicles for transportation of his employees. The question raised by the applicant is whether he is eligible to avail input tax credit of GST paid by the contractor on the services rendered to the applicant. He also wants the authority to clarify on the GST rate applicable on the same.

Held that—The availability of ITC as per the provision of second proviso to Section 17(5)(b) is available only on the condition that such goods or service or both is obligatory for an employer to provide to its employees under any law for the time being in force. Since, the applicant has not been able to cite any law under which the service of providing the facility of transportation to his employees is obligatory under any law, therefore ITC will not be available to him.

The applicable rate of tax on renting of Cabs as per Notification No. 20/2017 dated 22.08.2017 is 5% with limited ITC (of input services in the same line of business) and 12% with full ITC.—Prasar Bharti Broadcasting Corporation of India (All India Radio) , Shimla, In Re… [2020] 24 TAXLOK.COM 044 (AAR-HP)