The Government of West Bengal on October 04, 2024, issued clarifications on the availability of input tax credit in respect of demo vehicles.
The following has been stated: -
•The Demo vehicles, which are not used for transporting passengers or driving training, cannot claim ITC under certain exclusions.
•Since demo vehicles are used to facilitate the sale of similar vehicles, they qualify as "capital goods," allowing ITC under section 16(1), subject to certain conditions. If capitalized, the ITC may be restricted if depreciation is claimed under the Income-Tax Act. Dealers must also pay tax upon selling these vehicles later.
The detailed circular is given in the document below.
[Trade Circular No. 24/2024]
