Article Updated Date : 15-02-2025

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What is Blocked ITC

Blocked Input Tax Credit (ITC) refers to the Input Tax Credit that a registered person under GST cannot claim due to specific restrictions under Section 17(5) of the CGST Act, 2017. These restrictions are placed to prevent misuse and ensure that ITC is claimed only on eligible expenses.

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Categories of Blocked ITC under Section 17(5)

Motor Vehicles and Conveyances

• ITC is blocked on motor vehicles designed for carrying passengers with a seating capacity of up to 13 persons (including the driver), except when used for:
  • Further supply of vehicles
  • Passenger transport services
  • Training services on driving, flying, or navigation

Food, Beverages, and Outdoor Catering

• ITC is not available on food and beverages, outdoor catering, and similar services, except when:
  • Used for making taxable outward supply of the same category.

Club Membership and Recreational Services

• ITC is blocked for club memberships, health, and fitness center expenses.

Rent-a-Cab, Life Insurance & Health Insurance

• ITC is not allowed, except when:
  • Mandated by law (e.g., employee insurance under labor laws).
  • Used for providing similar taxable services.

Works Contract Services

• ITC is blocked on works contract services used for construction of immovable property, except where used for further supply of works contract services.

Construction of Immovable Property

• ITC is not allowed for goods/services used in the construction of immovable property (except plant & machinery) on own account.

Goods/Services for Personal Consumption

• Any ITC claimed on goods or services used for personal consumption is disallowed.

Goods Lost, Stolen, Destroyed, or Given as Free Samples

• ITC is blocked for goods lost, stolen, destroyed, written off, or given as gifts/free samples.

Tax Paid Due to Fraud, Non-Payment, or Detention

• ITC is not available on tax paid due to:
  • Fraud, suppression, or misstatement
  • Confiscation of goods or penalties under GST law.

Would you like a specific example or clarification on any of these?

Disclaimer:

This article is only for educational purpose

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