Dear Sir, My Client ( GST Registered person ) has bought an ESCORT Hydra Mobile Crane worth Rs. 22 lacs + 18% GST. He is into the business of supplying crane services to lift machinery, construction related items and other off road activities. Basically renting it on hourly basis. Now the question is whether he is eligible to avail the credit of the HYDRA Crane bought by him. Please provide legal basis with your answer.

Reply— As per Section 16 of CGST Act, every registered person shall, subject to such conditions and restrictions, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. However section 17(5) of CGST Act, 2017, restrict Input tax credit on few goods and services.

A taxpayer can claim ITC on Motor Vehicle when used for transportation of goods. Restriction on taking ITC is only on passenger vehicle, kindly refer section 17(5)(a) of CGST Act.