Blocked ITC

 What is Blocked ITC?

Blocked ITC means input tax credit which cannot be claimed, even if GST has been paid on such goods or services. Section 17(5) of CGST Act, 2017 lists these cases. ⸻ 🔸 Main Cases of Blocked ITC (Section 17(5)) 1. Motor vehicles & conveyances • ITC not allowed on motor vehicles for transportation of persons (seating capacity ≤ 13), except when used for: • Further supply of such vehicles (car dealers) • Transport of passengers (cab, bus operators) • Training on driving such vehicles • For vessels & aircraft, ITC blocked except when used for: • Transport of goods or passengers • Further supply (sale/lease) • Training 2. Food & beverages, outdoor catering, beauty treatment, health services, club membership, travel benefits to employees • ITC blocked, unless: • The inward supply is used to make outward taxable supply of the same category (e.g., catering company). • It is obligatory for employer under law to provide (e.g., canteen under Factories Act). ⸻ 3. Works contract services • ITC not available for works contracts for construction of immovable property (other than plant & machinery), except when used for further supply of works contract service. ⸻ 4. Construction of immovable property (on own account) • ITC blocked on goods/services used in construction of immovable property (other than plant & machinery), even if used in course of business. ⸻ 5. Goods/services received for personal consumption • Not eligible for ITC. ⸻ 6. Membership of club, health & fitness centre – ITC blocked. ⸻ 7. Travel benefits extended to employees (like LTC/Leave Travel Concession) – ITC blocked. ⸻ 8. Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples • ITC not available. ⸻ ✅ Plant & Machinery Exception: ITC is allowed for construction of plant & machinery (includes foundations, civil structures, pipelines, etc., but excludes land/building). ⸻ 👉 In short: Blocked ITC = Expenses on which GST is paid but law specifically disallows credit.