The Government of Gujarat on October 11, 2024, issued clarifications on the availability of input tax credits in respect of demo vehicles.
The following has been stated: -
•The Chief Commissioner of State Tax, Gujarat, has clarified that input tax credit (ITC) for demo vehicles used by authorized dealers is available under the Gujarat Goods and Services Tax Act.
•While demo vehicles are not eligible for ITC if used solely for passenger transport or training, they qualify for ITC when promoting the sale of similar vehicles.
•Additionally, capitalization of demo vehicles does not affect ITC entitlement, subject to certain conditions, including restrictions on claiming depreciation.
•Dealers must pay tax if they later sell the demo vehicles.
The detailed circular is given in the document below.
[Circular No. 231/25/2024-GST]
