Blocked Input Credits under GST

BLOCKED INPUT CREDITS UNDER SECTION 17(5) OF GST

Section 17(5) of the CGST Act provides that certain input credits are not available to anyone and are termed blocked. i.e. a registered person will not be able to take input credits of these items.

Here we look at what are the blocked credits as per the CGST Act and what are the exceptions to it.

In respect of the following, the input credit is not available or blocked :

(a) Motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:-

(i) further supply of such motor vehicles; or

(ii) transportation of passengers; or

(iii) imparting training on driving such motor vehicles;

(b) Vessels and aircraft except when they are used for :

(i) for making the following taxable supplies, namely:

(A) further supply of such vessels or aircraft; or

(B) transportation of passengers; or

(C) imparting training on navigating such vessels; or

(D) imparting training on flying such aircraft;

(ii) for transportation of goods;

(c) services of general insurance, servicing, repair, and maintenance in so far as they relate to motor vehicles, vessels, or aircraft as above

There are certain exceptions to it i.e. input credit will be available in the following situations :

(i) where the motor vehicles, vessels, or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein;

(ii) where received by a taxable person engaged-

(I) in the manufacture of such motor vehicles, vessels, or aircraft; or

(II) in the supply of general insurance services in respect of such motor vehicles, vessels, or aircraft insured by him

(d) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting, or hiring of motor vehicles, vessels, or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance:

However input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a 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.

(e) membership of a club, health, and fitness center; and

(f) travel benefits extended to employees on vacation such as leave or home travel concession:

(g) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;

(h) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his account including when such goods or services or both are used in the course or furtherance of business.

"construction" includes re-construction, renovation, additions or alterations, or repairs, to the extent of capitalization, to the said immovable property

(i) goods or services or both on which tax has been paid under section 10;

(j) goods or services or both received by a non-resident taxable person except on goods imported by him

(k) goods or services or both used for personal consumption

(l) goods lost, stolen, destroyed, written off, or disposed of by way of gift or free samples; and

(m) any tax paid in accordance with the provisions of sections 74, 129 and 130.

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