Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Common blocked credits
- Motor vehicles (except for specified business uses)
- Food, beverages, outdoor catering
- Club, health and fitness memberships
- Goods/services for constructing immovable property
Exceptions
Some are allowed when the input is used to make the same category of taxable supply (e.g., a transport business and its vehicles). Confirm for your facts.
The full list and the key exceptions
Section 17(5) blocks credit on a defined set of inward supplies even though GST was charged. The main items are: motor vehicles for transport of persons with up to 13 seats (and related insurance and servicing); food and beverages, outdoor catering, beauty treatment, health services, and club, health and fitness memberships; rent-a-cab, life and health insurance, except where the law makes them obligatory for an employer; travel benefits to employees on leave; works-contract services and goods or services used to construct immovable property on one’s own account (other than plant and machinery); goods lost, stolen, destroyed, written off, or given away as gifts or samples; and tax paid under certain demand or detention provisions. The important exceptions turn on use: a vehicle bought for further supply (a dealer), for transport of goods, or for a passenger-transport or driving-school business is allowed; food or catering used to make an onward taxable supply of the same kind is allowed; and works-contract input used to provide a further works-contract service is allowed. Because the line often depends on your exact business use, it’s worth confirming a borderline item rather than assuming, since a wrongly claimed blocked credit is reversed with interest.