Supplies on which input tax credit is not allowed in GST
Under GST regime input tax credit is available on goods and services received for the use in business. But there are certain conditions specified in section 17(5) of CGST act in which input tax credit is not available. The said section is briefed in table below:
| Section | ITC not allowed | Exception (to whom credit is allowed) |
| 17(5)(a) | motor vehicles and other conveyances | When they are used–
(i) for making the following taxable supplies, namely:— (A) further supply of such vehicles or conveyances ; or (B) transportation of passengers; or (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods. |
| 17(5)(b)(i) | food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery | If these are used for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply. |
| 17(5)(b)(ii) | membership of a club, health and fitness centre | No exception |
| 17(5)(b)(iii) | rent-a-cab, life insurance and health insurance | Except where––
(A) the Government notifies the services which are obligatory for an employer to provide to its employees; or (B) such inward supply of goods or services or both is used for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply. |
| 17(5)(b)(iv) | travel benefits extended to employees on vacation (LTA) | No exception |
| 17(5)(c) | works contract services for construction (“construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property) of an immovable
property |
(i) used for Pant and Machinery
(ii) where it is an input service for further supply of works contract service for e.g. service of sub-contractor used by contractor. |
| 17(5)(d) | goods or services or both received for construction (“construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property) ( or in the course or furtherance of business) of an immovable property | Used for Plant and Machinery |
| 17(5)(e) | Purchase from composite dealers | No exception |
| 17(5)(f) | non-resident taxable person receives goods or services or both | Goods imported by non resident taxable person |
| 17(5)(g) | goods or services or both used for personal consumption | No exception |
| 17(5)(h) | goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples | No exception |
| 17(5)(i)
Read with sec 74 of CGST Act |
Any tax paid due to-
by reason of
to evade tax |
No exception |
| 17(5)(i)
Read with sec 129 of CGST Act |
Any tax paid due to-
|
No exception |
| 17(5)(i)
Read with sec 130 of CGST Act |
Any tax paid due to confiscation of goods or conveyances if due to following reason:
If any person- (i) supplies or receives any goods in contravention of Act or rules with intent to evade payment of tax; or (ii) does not account for any goods on which he is liable to pay tax; or (iii) supplies any goods liable to tax without having applied for registration; or (iv) contravenes any of the provisions of this Act or the rules with intent to evade payment of tax; or (v) uses any conveyance as a means of transport for carriage of goods in contravention of Act or rules |
No exception |
Supplies on which input tax credit is partially allowed in GST
There are certain situations specified in GST Act where ITC is partially allowed which are as follows:
Section |
Situations |
Credit Allowed |
| 17(1) | goods or services or both are used partly for the purpose of any business and partly for purposes other than business | The amount of input tax credit allowed shall be only for that portion which has been used for the purpose of business. |
| 17(2) | goods or services or both are used partly for effecting taxable supplies including zero-rated supplies and partly for effecting exempt supplies | The amount of input tax credit allowed shall by only for that portion which has been used for said taxable supplies including zero-rated supplies |
| 17(4) | A banking company or a financial institution including a non-banking financial Company | They have options to choose one from below specified methods:
Other conditions to fulfil:
|
