17(5) Blocked ITC

ITC on motor vehicles for personal transportation ($\le 13$ seats) is generally blocked under Section 17(5) unless the business involves vehicle dealing, passenger transport, or driving instruction.

Section 17(5) lists specific categories where ITC is blocked regardless of business use. The key ones:

Motor vehicles: ITC blocked on cars and vehicles up to 13 passengers. Exceptions: commercial passenger transport, vehicle dealerships, driver training.

Insurance, servicing, maintenance of those vehicles: If the principal vehicle is blocked, everything related to it (repairs, insurance, tyres) is also blocked.

Food, beverages, outdoor catering: Blocked unless your business is supplying the same.

Construction of immovable property: Works contract services and goods used for building construction are blocked, even for a business building. Exception: plant and machinery fixed to the ground.

Club membership and personal expenses: Fully blocked.

The most common mistake is claiming ITC on these categories because the purchase is for the business. Section 17(5) is an absolute block based on the nature of the goods or services, not business purpose.

For how blocked ITC applies to construction and works contracts specifically, this [GST on works contract India 2026 guide](https://taxgarden.in/blog/gst-on-works-contract-construction-services-india-2026) covers the ITC eligibility rules including Section 17(5) exceptions for plant and machinery.