Section 17(5) of CGST Act refers to a specific provision under GST covering blocked credits or ineligible ITC. The taxpayer cannot claim ITC while paying output tax when they make purchases listed in this provision.
You cannot claim ITC on vehicles purchased for passenger transportation such as-
Four-wheeler motor cars or
Three-wheelers or auto rickshaws or
Two-wheeler motorbikes or cycles or
Tempo Travellers (TT) or buses having less than or equal to 13 seats, including the driver.
Or any other vehicle used on the road
However, ITC claims are still allowed for the purchase of a passenger transportation vehicle where you (buyer) conduct the following businesses-
Further supply of same product
Passenger transportation service
Driving schools
You cannot claim ITC on the purchase of the following-
Expense paid for outdoor catering or food or beverages
Spending on health services, beauty treatment, plastic surgery and cosmetic surgery
Giving vessels or aircraft or motor vehicles for rent or lease or hire.
Obtaining life insurance and health insurance
Incurring expenses to obtain club membership or towards health and fitness centres
Expense of leave or home travel concession or travel benefits for employees on vacation
You can still claim ITC on food expenses, health service costs, renting of conveyances and insurance if-
You are reselling the same goods or services
You are reselling these together with other goods or services as a composite or mixed sale
It’s mandatory for the employer to provide the above services or goods to its employees to comply with any law
You can still claim ITC on club membership and home travel concession:
Wherever it’s mandated for the employer to supply the above to its employees to comply under any law
