GST Panel Proposes ITC Relief on Company Cars, Group Insurance

Companies could soon claim input tax credit on vehicles bought for employee use and on group health and life insurance policies, under proposals from the law committee reporting to the GST Council, according to people aware of the matter.

The proposals, part of the committee's ease of doing business review, are expected to reach the GST Council at its next meeting, a senior official told ET. If approved, businesses across sectors would be able to offset the GST paid on such purchases, lowering the cost of these investments.

Under the current GST regime, ITC on motor vehicles is restricted to specific categories – manufacturers, dealers, driving schools, and certain passenger transport businesses. The restriction was designed to prevent credit claims on vehicles that could also be used personally. As a result, companies buying cars for executives, sales teams, or official travel generally cannot offset the GST. The same limits apply to related expenses such as vehicle insurance, repairs, and maintenance.