Every registered person under GST can claim ITC of goods and services or both received in course or furtherance of business subject to certain stipulations as laid down primarily under Section 16, 17, and 18. Sub-section (5) of section 17(5) of Central Goods & Services Tax Act, 2017, gives comprehensive list of supplies on which Input tax credit is blocked, commonly known as “Blocked-Credit”. This list of blocked credit has been updated by amendment in GST Act which shall come into force from 1st February 2019 and the same is presented below in a tabular form for understanding purpose.
| Nature of Goods or Service or both | Exception (Who can claim ITC even when it is Blocked for others) | Examples |
| Motor Vehicle for transportation of persons with seating capacity not more than 13 persons (including driver), except when the supply used for:- a) Further supply of such motor vehicles b) Further engaged in business of Transportation of Passengers c) Training on driving of such motor vehicles | Credit shall be allowed only to such persons who are engaged in the supply of activities as mentioned in point no. a), b), & c) | Company purchase car for director use or employee’s transportation, the ITC on such motor vehicle is not allowed. But if such company purchase bus with seating capacity more than 13 persons for transportation of their employees, it can can claim ITC. |
| Purchase of Vessels and Aircraft except when they are used for:- a) Further supply of such vessel and aircraft b) Further engaged in business of Transportation of Passengers or Goods c) Training on navigation of such vessel or flying such aircraft | Credit shall be allowed only to such persons who are engaged in the supply of activities as mentioned in point no. a), b), & c). [Subject to availing the benefit of entry no. 9(ii) of notification no. 11/2017-CT (R).] | For example, ITC on purchase of aircraft for travel of Board of Directors of company cannot be availed. |
| Credit of following services not allowed w.r.t. motor vehicles, vessel and aircrafts as mentioned above a) Service of General insurance b) Servicing, repair and maintenance | Credit of such services will be allowed only to those who are eligible to avail ITC on purchase of such motor vehicles, vessels and aircrafts. The manufacturer of such motor vehicles, vessels and aircrafts can claim ITC on such services. The person engaged in the business of general insurance of such motor vehicles, vessels or aircraft insured by him. | A transport company purchase truck for transportation of goods can claim ITC of such services, but a company bought car for director in the name of company cannot avail ITC on such services. The vehicle manufacturers can claim ITC of such services like, TATA, Maruti, Honda etc. General insurance companies can avail the ITC of such services only in case where insurance is done w.r.t. motor vehicles, vessels and aircrafts by company and claimed by customer |
| Food & Beverages Outdoor Catering Beauty Treatment Health Services Cosmetic & Plastic Surgery Leasing Renting & Hiring of Motor Vehicles, Vessels and Aircrafts Life Insurance Health Insurance | Credit of ITC is allowed only to such persons who further use these supplies to provide same category of supply or as an element of a taxable composite or mixed supply. If any of these services are obligatory in nature under any law, then such registered person can claim ITC of such services. | Outdoor catering service availed by company for employees or any other person, the ITC on such service is not allowed. However, ITC of same is allowed if an outdoor caterer avail services of another caterer. Hiring of Bus for transportation of employees, or cab facility, the ITC is not allowed. Health insurance or Canteen in factory compulsory under Factory’s Act, then ITC can be claimed. |
| Membership of Club, health & Fitness Centre | If any of these services are obligatory in nature under any law, then such registered person can claim ITC of such services. | For example, Golf club membership paid by company, then ITC is not allowed. |
| Travel Benefit Extended to Employees on Vacation such as leave or home travel concession | If any of these services are obligatory in nature under any law, then such registered person can claim ITC of such services. | For example, air ticket sponsored by company for holiday of employee, then ITC is not allowed. |
| Works Contract Service used for immovable property other than plant & machinery but including repair maintenance and renovation to the extent of capitalization | Credit of ITC shall be allowed only to such persons who further use these supplies to provide same category of supply like construction of building etc. | ITC on construction of office and factory is not allowed. However, if repair & maintenance is done and the same is not capitalized in books then ITC is allowed. |
| Goods and services received for Construction of Immovable Property on his own account | Credit of ITC shall be allowed only to such persons who further use these supplies to provide same category of supply | ITC of goods and services not allowed for Construction of new office/factory, whether goods are purchase by company itself. |
| Composition Dealer | – | Goods and services on which tax is paid under composition scheme by the dealer, ITC shall not be allowed of such supply. |
| Goods and services received by Non-Resident Taxable Person | Non-resident person supply goods and services in India except in case where goods imported by him | This clause is applicable on non-resident persons only |
| Supply used for Personal Consumption | – | For example, fees of director personal income tax return paid by company, then ITC on such inward supply is not allowed |
| Goods Lost, Stolen, Destroyed, Written off, free samples | – | Goods stolen during transportation, then ITC is not allowed. |
| Tax Paid Under Section 74, 129 & 130 | – | ITC is not allowed where tax has been paid by any person due to fraud, wilful-misstatement |
