Blocked input credit u/s 17 (5)

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This query is : Resolved

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This discussion clarifies the eligibility of input GST credit for specific business expenses under Section 17(5) of the GST Act. While health insurance for permanent employees and Diwali gifts to clients might be claimable if considered business promotion, festival expenses like sweets and gifts for workers and clients are generally considered blocked credits and cannot be claimed.

PARDEEP KAPIL

PARDEEP KAPIL (Querist)
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10 October 2024 Dear Sirs : One of my clients who is manufacturing goods has claimed input GST credit on (a) health insurance of permanent employees (b) Diwali gifts to clients (c) festival / diwali expenses. Please advise that do these expenses fall in category of blocked credit u/s 17(5). Is there any justification for claiming input tax credit ? Kind regards

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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15 October 2024 a and b ITC can be claimed being related to business promotion.
c ITC can't be claimed as it's not related to business promotion.

PARDEEP KAPIL

PARDEEP KAPIL (Querist)
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15 October 2024 dear Mr Seetharaman ji : (c) festival / diwali expenses. These expenses are for sweets and gifts distributed to workers and clients .... kindly suggest

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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15 October 2024 you can't claim input tax credit (ITC) on the GST paid for these gifts, regardless of the value.

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