A free flow of input tax credit is a backbone of GST Law for eliminating cascading effects of taxes. However , section 17(5) of the CGST Act,2017 specifies certain Goods and Services as Blocked Credit . It means , a taxable person is not eligible to take Input Tax Credit ( ITC) on the goods and services specified under 17(5) of CGST Act 2017.
Sec 17(5) of the GST Act has been substantially amended vide GST Amendment Act 2018 applicable w.e.f.01 Feb 2019 . In this article , an attempt has been made to cover all the provisions , amendments , interpretations , case laws in respect of Blocked credit under GST Act.
- Motor vehicles & conveyances:
ITC is not available for Motor vehicles used to transport persons, having a seating capacity of less than or equal to 13 persons (including the driver). However, ITC is available if the seating capacity of such motor vehicles exceeds 13 persons. Further, ITC is not available on vessels and aircrafts.
Exceptions:
- Supply of other vehicles or conveyances, vessels or aircrafts. The business of supplying cars then ITC will be available.
- Transportation of passengers then ITC available.
- Imparting training on driving, flying, navigating such vehicle or conveyances or vessels or aircrafts, respectively.
- Transportation of goods, ITC will be allowed on motor vehicles used to transport goods.
- No ITC for following
- Composition Scheme
- No ITC for Non Residents
- No ITC for Personal Use
- Free Samples and destroyed Goods
- No ITC in fraud cases
- No ITC on restaurants
