GST on vehicle servicing, labour and parts

Vehicle service bills in India typically split into two parts: labour (the workshop's service charge) and parts (the spare parts replaced or fluids topped up). Each has its own GST treatment.

Labour: 18% GST under SAC 998719

Motor vehicle service labour is classified under SAC 998719 (Maintenance and repair services of transport machinery and equipment) at 18% GST, per CBIC Notification 11/2017 - Central Tax (Rate). The same 18% rate applies whether the work is at:

• OEM authorised service station (Maruti ASS, Hyundai, Tata, etc.)
• Multi-brand independent garage
• Tyre or battery shop
• Roadside breakdown service
• Mobile mechanic / on-site service

Parts: post-22-Sep-2025 uniform 18%

The 22 September 2025 GST 2.0 reform restructured motor-vehicle parts taxation. Earlier, parts were spread across 18% and 28% slabs depending on item, confusing for both billers and customers. Post-reform, the rates are consolidated:

• Motor vehicle parts and accessories (HSN 8708, brakes, clutches, axles, gearboxes, body panels, suspension, etc.), 18% (down from 28%)
• Car tyres (HSN 4011.10), 18% (down from 28%)
• Truck and bus tyres (HSN 4011.20), 18% (unchanged from earlier 25th GST Council reduction)
• Tractor tyres and tubes, 5% (down from 18%, agricultural support measure)
• Bicycle and cycle-rickshaw tyres, 5%
• Engine oil and lubricants (HSN 2710), 18%
• Batteries (HSN 8507), 18%
• Glass, windscreens (HSN 7007), 18%
• Wipers, windscreen washer (HSN 8512), 18%
• Bike spare parts (HSN 8714), 18%

The simplified structure means most vehicle service bills now carry a single 18% GST rate across labour and parts. This is a major simplification, pre-Sep-2025 bills typically had to split between 18% (labour, lubricants) and 28% (parts, tyres). The bill should still split labour and parts on separate lines under Rule 46(l) for ITC reconciliation, even though the rate is uniform.

The big ITC question, Section 17(5)(a)

This is where vehicle maintenance gets interesting. Section 17(5)(a) of the CGST Act blocks ITC on motor vehicles for transport of passengers with seating capacity of 13 persons or fewer (including the driver), i.e. cars, SUVs, MUVs, small vans. The block applies to:

• The motor vehicle itself
• The maintenance and repair services for that vehicle
• Parts replaced during such services
• Insurance on the vehicle

So a normal company using a personal-use car for executives cannot claim ITC on the 18% labour or 28% parts of its service bill. Even if the bill is in the company's name with company GSTIN.

Exceptions where ITC IS allowed

Section 17(5)(a) lists four exceptions where the ITC block does NOT apply:

• Vehicles used for further supply (a car dealer reselling cars)
• Vehicles used for passenger transport as a business (taxi/cab fleet operator with commercial registration)
• Vehicles used for training drivers (motor driving schools)
• Vehicles used for transport of goods (trucks, tempos, delivery vans of any seating)

For these uses, ITC on the vehicle, its maintenance, parts, and insurance is fully claimable. The vehicle's registration certificate must show the commercial / transport vehicle category, a personal-use registration on a "company car" doesn't unlock ITC.

Insurance claim repairs

When a service is done as part of an insurance claim, the bill is typically:

• Raised in the insurance company's name (cashless claims) or
• Raised in the customer's name with insurance reference (reimbursement claims)

The insurance company can claim ITC on the GST charged because they're treating the repair as an input cost (Section 16). The customer in a reimbursement claim is recovering a personal expense and doesn't deal with ITC.

What the bill must contain

• Service centre name, address, GSTIN
• Vehicle registration number (VRN), make, model, year, current KM reading
• Customer name, address, GSTIN (for ITC)
• Job card number / service order number
• Date of service in and out
• Labour line(s) with SAC 998719 and 18% GST
• Each spare part line with its HSN and applicable GST rate
• GST split by bracket (18% and 28% subtotals)
• Discounts and warranty adjustments
• Total payable
• Mode of payment
• Service advisor / authorised signatory

Common mistakes

• Claiming ITC on a personal-use car's service bill. Section 17(5)(a) blocks it.
• Bundling labour into the parts line. Different SAC/HSN, must split.
• Single 18% rate on a bill that includes tyres. Tyres for cars are 28%.
• Missing the VRN on an insurance-claim bill. Insurer rejects.