Share on Social 👇
Can You Claim Input Tax Credit On Travel?
Input Tax Credit or ITC is claiming the credit of GST paid on purchase of goods or services (like travel), which use for the furtherance of business.
What Are The Significant Modes For Traveling In India?
In India, there are three significant modes for travelling – air, rail and road
- Air: If the passenger wants to reach its destination faster and in less time, then obviously he will choose to go by air. However, this mode of travel comes at an additional cost like security fees, handling charges, duty cost, higher GST rate, etc., Moreover, which make its a costly affair to travel.
- Rail: The railways are consider to be one of the best mode of travel. In addition, it is so because not only because of the convenience but also due to its low prices (less or no GST at all)
- Road: Travelling by road is the most common mode of travel across all the States. The shorter distances can be easily cover through public transport like bus / radio taxes / cabs at a cheaper price.
GST Rates Applicable For Travel
Economy class air tickets
Tickets of chartered flights for the purpose of a pilgrimage visit
Business class air tickets
Rental services of aircraft and chartered flights with or without operator
AC and First-Class train tickets
Sleeper and general class tickets
Metro train tickets
Passengers travelling through public transport
Transport by road of passengers through metered taxi/auto rikshaw or e-rikshaw
Transport by Non-AC contract carriage or stagecoach
Transport by air-conditioned contract carriage or stagecoach
Transport by radio taxi and similar transportation services
Rental services of road transportation including cars, buses, coaches
Can You Claim Input Tax Credit On Travel?
Input Tax Credit can use only in case, it is used for furtherance of business. In simple words, ITC on travel can be claim only if the same has been used for the business purpose. In addition, no ITC can be claim in case the travel is meant for personal purposes.
Further, ITC is also not available in case of travel, benefits extended to employees on vacation such as leave or home travel concession.
For instance, Relicare Ltd. has offered a travel package to its employees for personal holidays at Goa. In this case, Relicare Ltd. cannot claim ITC on GST paid by them for the holiday package. In addition, ITC on travel is allowed only for business purposes.
On the other hand, Toto Ltd. has offered a travel package for 2 days to its employees to attend company’s seminar at Udaipur. In this case, Toto Ltd. can claim ITC on GST paid for the travel package. Moreover, this is so because the GST on package payable for the business purposes i.e., company’s seminar.
Flow of Input Tax Credit in Various Cases
Following are the cases which illustrates the flow of Input Tax Credit in various cases:
- Where the travel tickets have been book via an online travel agent:
In this case, the business entity will be need to book two invoice separately. Furthermore, Airline/Railway Department or any other Transport Department and Online Travel Agent.First, will be of the Transport Department who is actually going to provide the traveling service. Even more, the department will issue a separate tax invoice. This will including the amount of GST applicable on the ticket fare in the name of the business entity. In addition, through this invoice, business can take the credit of GST pay on travel ticket.Second invoice will be of the travel agent. The online travel portal will charge “Convenience Fee and other booking charge”. In addition, GST to the cost of travel ticket and will raise the invoice. Moreover, GST input tax credit will flow from both the places i.e. from Transport Department and Online Travel Agent/Portal.
- In case the tickets have been booked via an offline travel portal:
This case is same as the online travel agents mentioned in point 1 above. The offline travel agent will raise a reimbursement cum tax invoice for the reimbursement of travel ticket amount pay by him and his ticket booking charges including GST.In this scenario also, GST input tax credit will flow from both the places. Moreover, i.e. from Transport Department and Offline Travel Agent.
- Where the tickets have been booked directly from the website of Transport Department:
In this case, GST credit in respect of GST charged by Transport Department would be available. In addition, to business via GST invoice or e-ticket issued by the Department
If you are travelling for the purpose of your business and you have a GST Number. Moreover, then you can avail the Input Tax Credit on the GST paid. While purchasing the tickets, you must correctly mention your GSTIN. Furthermore, this is so the seller will upload the invoice in his GSTR-1 with your GSTIN. This invoice will then reflect in his GSTR-2B form. In addition, after this, you can claim ITC in GSTR-3B form depend on the invoice details provide, as visible in his GSTR-2B.