Under section 17(5) of the CGST Act, there are certain supplies on which input tax credit under GST is not available. These supplies can also be said as blocked credit.
Section 17(5)(a):
(1) Motor Vehicle for transportation of person having approved seating capacity of not more than 13 persons
Except when used for:
1. Further Supply of Vehicles
2. Transportation of passenger (transport Agency)
3. For Training Classes
Vessels & Aircraft
Except when used for:
1. Further Supply
2. Transportation of passengers
3. Imparting training on navigating such vessels
4. Imparting training on Flying such aircraft
5. Transportation of Goods
(2) Section 17(5)(b) :
Foods & beverages, outdoor catering, beauty treatment, health insurance, cosmetic & plastic surgery, renting or hiring of a motor vehicle as above
Except it is used for:
Making outward taxable supply of the same category of services or an element of mixed or composite supply
(3) Membership of a club, health and fitness Centre (No exception)
(4) Rent a Cab, Life Insurance, Health Insurance except
– Where it is made obligatory by Government.
– It is used for making outward taxable supply of the same category of services or an element of mixed or composite supply.
(5) Travel Benefits to Employees
Provided that the Input Tax Credit in respect of such goods or services or both shall be available, where an employer must provide the same to its employees under any law for the time being in force
(6) Works Contract Service when supplied for construction of an immovable property(not plant & machinery) except:
– Where it is an input service for further supply of Works Contracts
(7)Goods & Services received for construction of an immovable property (not plant & machinery) on his own account including when such goods/services are used in Business. (Construction includes reconstruction, renovation, additions or alteration or repairs to the extent of capitalization, to the said immovable property)
(8)Person who made the payment of tax under Composition Scheme under GST law.
(9)ITC cannot be availed on goods/service received by a non‐resident taxable person except:
– Only Goods imported by him
(10)Personal Use.
(11)Goods lost, stolen, destroyed, written off, or given off as gift or free sample
(12)Any tax paid due to fraud cases which have resulted into –(Tax Paid u/s 74,129 &130)
– Non or short tax payment or
– Excessive refund.
New Provision
General Insurance, Servicing, repair & maintenance in so far related to such vehicles, Vessels, aircraft are not allowed except if it is used for
1. Purpose specified therein.
2. If above services received by the manufacturer of such vehicles, vessels, aircrafts
3. If the above services received by the general insurance service provider in respect of such motor vehicles
Comparison between old and new provisions:‐
| Old Provisions | New Provisions |
|---|---|
| Section 17(5)(a): Motor Vehicle & Other Conveyance(Vessels & Aircraft) Except it is used for: 1. Making taxable supplies‐Sale of Such Vehicles 2. Transportation of Passengers 3. Used for Training Classes 4. Transportation for Goods Expenses are relating to such vehicles as repairs, Servicing, Insurance was also not allowed for claim ITC. (It was not mentioned earlier in Act) | Section 17(5)(a): (1) Motor Vehicle for transportation of person having approved seating capacity of not more than 13 persons Except when used for: 4. Further Supply of Vehicles 5. Transportation of passenger (transport Agency) 6. For Training Classes(2) Vessels and Aircraft Except when used for: 6. Further Supply 7. Transportation of passengers 8. Imparting training on navigating such vessels 9. Imparting training on Flying such aircraft 10. Transportation of Goods |
| General Insurance, Servicing, repair & maintenance in so far related to such vehicles, Vessels, aircraft are not allowed except if it is used for 1. Purpose specified therein. 2. If above services received by the manufacturer of such vehicles, vessels, aircrafts 3. If the above services received by the general insurance service provider in respect of such motor vehicles | |
| Section 17(5)(b): Foods & beverages, outdoor catering, beauty treatment, health insurance, cosmetic & plastic surgery Except it is used for: Making outward taxable supply of the same category of services or an element of mixed or composite supply | Section 17(5)(b): Foods & beverages, outdoor catering, beauty treatment, health insurance, cosmetic & plastic surgery, renting or hiring of a motor vehicle as above Except it is used for: Making outward taxable supply of the same category of services or an element of mixed or composite supply |
| Travel Benefits to Employees | Travel Benefits to Employees Provided that the Input Tax Credit in respect of such goods or services or both shall be available, where an employer must provide the same to its employees under any law for the time being in force |
