Section 17(5) of the Central Goods and Services Tax (CGST) Act, 2017 outlines the scenarios under which Input Tax Credit (ITC) is blocked and not available to a taxpayer. This provision restricts the claim of ITC on certain inputs, goods, and services. The exhaustive list of cases where ITC is blocked under Section 17(5) includes:
Motor Vehicles and Conveyances: ITC is not available for motor vehicles and other conveyances, except in specific situations as outlined in the section.
Food and Beverages, Outdoor Catering, Beauty Treatment, Health Services: ITC cannot be claimed on goods and services related to food and beverages, outdoor catering, beauty treatment, health services, cosmetic surgery, etc., when provided to employees.
Membership of Clubs, Health, and Fitness Centers: ITC is blocked on expenses related to membership of clubs, health and fitness centers, unless mandated by law for employees.
Travel Benefits to Employees: ITC is not available on travel benefits provided to employees on vacation, such as leave or home travel concession.
Works Contract for Immovable Property: ITC is blocked on works contract services when they pertain to the construction of immovable property (other than plant and machinery) on the supplier’s or recipient’s premises.
Goods or Services Used for Personal Consumption: ITC cannot be claimed on goods or services used for personal consumption.
Goods Lost, Stolen, Destroyed: ITC is blocked on goods lost, stolen, destroyed, written off, or disposed of as gifts or free samples.
Taxable Person is Required to Compulsorily Register: ITC is not available if the taxable person is required to register under GST but has opted for voluntary registration.
Non-Resident Taxable Person: ITC is blocked for a non-resident taxable person.
Composition Scheme: ITC cannot be claimed by a person opting for the composition scheme.
Goods/Services Used for Non-Business Purpose: ITC is not available on goods or services used for non-business purposes.
Tax Paid Under Composition Scheme: ITC is blocked on tax paid on inputs or capital goods on which the supplier has opted for composition scheme.
