Blocked Credit- Section 17(5)

Blocked Credit – Supply of goods and services ineligible for ITC

Though definition of input tax is broad, input tax credit shall not be available in respect of activities and transactions specified in section 17(5) of CGST Act [termed as ‘blocked credit’]

The specific exclusions means that but for such exclusion by blocking credit, the Input Tax Credit (ITC) would have been available.

The blocked credit as applicable w.e.f. 1-2-2019 is summarized below.

ITC is not available in respect of following –

  • Motor vehicles for transportation of persons having approved seating capacity of 13 persons or less including driver, except when used for further supply, transportation of passengers or training. ITC on its leasing, renting or hire is also not allowable, except when used for making outward supply of same category of goods or services, or as element of mixed /composite supply
  • Vessels and aircrafts, except when used for (i) further supply, transportation of passengers or training (ii) transportation of goods. ITC on its leasing, renting or hire is also not allowable, except when used for making outward supply of same category of goods or services, or as element of mixed/composite supply
  • General Insurance, health insurance, servicing, repairs and maintenance of motor vehicles, vessels and aircrafts which are not eligible for ITC, except when used for making outward supply of same category of goods or services or as element of mixed/composite supply
  • Food, beverages, outdoor catering, beauty treatment etc. except when used for making outward supply of same category of goods or services, or as element of mixed/composite supply
  • Membership of club, health and fitness centre
  • Travel benefits extended to employees on vacation
  • Works contract service for construction, repairs, renovations, additions, alterations, re-construction of immovable property except when used for further supply of works contract service
  • Construction, repairs, renovations, additions, alterations,                         re- construction of immovable property except plant and machinery on his own account
  • Tax paid under composition scheme under section 10 of CGST Act
  • Goods and services received by non-resident taxable person except goods imported by him
  • Goods and services used for personal consumption( may be of employees, directors or even others)
  • Goods lost, stolen, destroyed, written off or given as gift or free samples
  • Tax paid under section 74(tax paid after allegation of fraud, wilful misstatement or suppression of facts), 129(tax paid after detention of goods in transit for violations of provisions of e- way bill) and 130 (penalty paid after confiscation of goods).

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