New Delhi: Registered automobile dealers can claim input tax credit (ITC) on cars that are used for demonstration to potential customers, commonly known as demo cars, the West Bengal bench of the GST Authority for Advance Ruling (AAR) has ruled.

Landmark Cars East Pvt Ltd, an authorised agent of Mercedes Benz, had filed an application before the bench seeking a ruling on various taxation aspect of demo car.

“The applicant is entitled to claim input tax credit charged and paid on inward supply of car which are used for demonstration purpose and supplied further after a specified time period,” the AAR said.

This ruling was in response to a question on whether the applicant is entitled to claim ITC charged and paid on inward supply of car from Mercedes Benz India that are used for demonstration purpose to the potential customer interested in buying Mercedes Benz Car.