The Authority for Advance Rulings (AAR) has clarified that employers in Tamil Nadu can now avail of ITC on the Goods and Services Tax (GST) paid for leasing vehicles used to transport women employees during nighttime and early morning hours.
This ruling is particularly relevant in states where employers are required to provide transportation to women employees during specific time slots.
Important: New Complexities While Claiming GST ITC for Businesses
According to the AAR, the GST input tax credit (ITC) can be claimed if women employees either arrive at or depart from their workplace between 8 p.m. and 6 a.m. This ruling came into effect on May 28, 2019, in Tamil Nadu.
Previously, GST officials contended that ITC could not be claimed for rented cab services, citing section 17(5)(b)(iii) of the GST law, an indirect tax law provision.
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However, the AAR pointed out that this section had been amended through a notification in January 2019. The amendment stipulated that ITC could be claimed for goods or services when it is mandatory for an employer, under any law, to provide such services to employees. This amendment took effect on May 28 of that year.
In the case of Tamil Nadu, it is indeed obligatory for employers to offer transportation services to women employees working between 8 p.m. and 6 a.m., as mandated by the Tamil Nadu Shops and Establishment Act.
The AAR made it clear that because the local law mandates employers to furnish cab services for female employees, this cannot be categorized as a blocked credit.
Therefore, businesses should exercise meticulous care in complying with these provisions when seeking to claim this input tax credit under GST.
| Applicant Name | Access Healthcare Services Pvt. Ltd. |
| GSTIN of the applicant | 33AAJCA1885H1ZN |
| Order No. | Advance Ruling No. 14/ARA/2023 |
| Date | 15.06.2023 |
| TN GST AAR | Read Order |
