Blocked credit in GST

Section 17(5)(a)

Section 17(5)(a) of the Central Goods and Services Tax (CGST) Act, 2017, outlines specific scenarios where Input Tax Credit (ITC) is restricted, commonly referred to as "blocked credits."

According to Section 17(5)(a), ITC is not available on these goods or services:

1) Clause (a) - Motor vehicle for transportation of person having approved seating capacity of not > 13 persons (Including driver).

Except: Making the following taxable supplies

1. Further supply of such vehicles or conveyances
2. Transportation of passengers
3. Imparting training on driving, flying, navigation such vehicles or conveyance.

2) Clause (aa) - Vessels or aircraft.

Except: Making the following taxable supplies

1. Further supply of such vehicles or conveyances
2. Transportation of passengers
3. Imparting training on driving, flying, navigation, such vehicles or conveyance.

Transportation of goods

3) Clause (ab) - Services of general servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircrafts referred to in clause (a) & (aa)

Except: Services are received by a taxable person engaged in

(a) Manufacture of such motor's vehicles, vessels or aircraft.

(b) In the supply of general insurance services in respect of motor vehicles, vessels or aircraft insured by him.

• Where the motor vehicles, vessels and aircrafts referred to in clause (a) and (aa) are used for purpose specified therein.

Section 17(5)(b)

According to section 17(5)(b), ITC is not available on the supply of these goods, services or both.

• Foods and beverages
• Outdoor catering
• Beauty treatment
• Health services
• Cosmetic and plastic surgery
• Leasing, renting or hiring of motor vehicles, vessels or aircrafts referred to in clause (a) and (aa)

Except:

1) When they are used by the business specified therein.

2) Life insurance.

3) Health insurance.

• Inward supply is used by registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply

1) Membership of club, health or fitness centre.

2) Travel benefits extended to employees on vacation such as leave or home travel concession.

Except: It is obligatory for the employer to provide the same to employees

Section 17(5)

According to section 17(5), ITC shall not be available on:

1) Sub-section (c) - Work contract services when supplied for the construction of immovable property

Except: It is an input service for further supply for works contract

2) Sub-section(d) - Goods & services or both are received by taxable person for the construction of immovable property (Including such goods or services are used in the course or furtherance or business).

Except: Such immovable property is plant & machinery.

3) Sub-section(e) - Tax has been paid under the composition scheme.

4) Sub-section(f) - Inward supplies received by a Non-resident Taxable person.

5) Sub-section(g) - Goods & services both are used for personal consumption.

6) Sub-section(h) - Goods lost, stolen, destroyed, written-off or disposed by way of gift or free samples.

7) Sub-section(i) - Tax paid as a result of evasion of taxes or upon detention of goods in transit or towards redemption of confiscated goods.