Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Cars are usually blocked
ITC on a motor vehicle for passenger transport with up to 13 seats is blocked under Section 17(5) — so a company buying a car for staff use cannot claim the GST. The exceptions are narrow: you may claim if you are in the business of selling such vehicles, providing passenger transport, or running driving schools.
Other blocked expenses
Section 17(5) also blocks ITC on food and beverages, outdoor catering, club and gym memberships, health insurance (with exceptions), goods given as gifts or samples, and works-contract/construction for immovable property. Anything for personal use is also blocked. There are conditional exceptions — confirm for a specific expense.
A worked example
Example: a consultancy buys a ₹15 lakh car — the ₹2.7 lakh GST is not claimable. But the GST on its office rent, laptops, software and professional services is claimable, being genuine business inputs. A cab operator, by contrast, can claim ITC on its cars. Knowing what is blocked avoids wrongly claimed credit that gets reversed with interest. Our team can review your ITC.