“BLOCKED CREDIT” UNDER GST- APPLICABLE FROM 1st FEBRUARY 2019
Every registered person under GST can claim Input Tax Credit (ITC) of goods and services or both received in the course of business subject to section 16, 17 and 18 of GST Act.
Section 17(5) subsection (5) of Central Goods and Service Tax Act, provides a list of supplies on which Input Tax Credit is blocked. This list is commonly known as “Blocked Credit”. This list is updated and will be applicable form 01.02.2019.
|Sr. No.||Nature of goods and services||Example||Exception (Person who can claim ITC)|
|1.||Motor Vehicle for transportation of persons with seating capacity not more than 13 persons (including driver)||ABC ltd. buys car for transportation of directors. ITC for the same cannot be availed. But if the Co. buys a bus with a seating capacity of more than 13 persons for transportation of its employees, ITC can be availed.||Credit shall be allowed only to those persons engaged in the supply of following activities-
a. Further supply of such motor vehicles
b. Engaged in the business of transportation of passengers
c. Training on driving of such motor vehicles.
|2.||Purchase of Vessels and Aircraft||ITC on purchase of aircraft for travel of directors cannot be availed.||Credit shall be allowed only to those persons engaged in the supply of following activities-
a. Further supply of such vessel and aircraft
b. Engaged in the business of transportation of passengers or goods
c. Training on navigation of such vessel or flying such aircraft.
|3.||Credit of following services not allowed w.r.t. to motor vehicle, aircrafts and vessel-
a. Servicing, repairs and maintenance
b. General insurance
|ITC can be availed by Transport Company who purchases truck for transportation of goods. But if a company purchases a car for directors in the name of company, ITC cannot be availed.||ITC can be claimed by –
a. Person who are eligible to avail ITC on purchase of motor vehicle, aircrafts and vessel.
b. Manufacturer of such motor vehicle, aircrafts and vessels.
c. Person engaged in the business of insurance of such motor vehicle, aircraft and vessels.
|4.||Food & Beverages, Outdoor Catering, Beauty Treatment, Health Services, Cosmetic & Plastic Surgery, Leasing Renting & Hiring of Motor Vehicles, Vessels and Aircraft, Life Insurance, Health Insurance||a. Health insurance or Canteen in factory if compulsory under Factory’s Act, then ITC can be claimed.
|Credit of ITC is allowed only to such persons who further use these supplies to provide same category of supply or as an element of a taxable composite or mixed supply.
If any of these services are obligatory in nature under any law, then such registered person can claim ITC of such services.
|5.||Membership of Club, health & Fitness Centre||Sports club membership paid by Company, then ITC is not available.||If such services are obligatory in nature under any law, then registered person can claim ITC.|
|6.||Travel Benefit Extended to Employees on Vacation such as leave or home travel concession||Tickets sponsored by company to its employees, ITC will not be available.||If such services are obligatory in nature under any law, then registered person can claim ITC.
|7.||Works Contract Service used for immovable property other than plant & machinery but including repair maintenance and renovation to the extent of capitalization||ITC is not available on construction of office or factory. However, if repairs and maintenance is done and is not capitalized, ITC for the same can be availed.||Credit of ITC shall be allowed only to such persons who further use these supplies to provide same category of supply like construction of building etc.|
|8.||Goods and services received for Construction of Immovable Property on his own account||ABC ltd. Purchased raw material for construction of factory, ITC for the same is not allowed.||Credit of ITC shall be allowed only to such persons who further use these supplies to provide same category of supply|
|9.||Composition Dealer||When tax is paid under composition scheme, ITC is not allowed.||–|
|10.||Goods and services received by Non-Resident Taxable Person||Mr. A, a non resident Indian Imports goods from U.S.A. ITC on the same will be available to him.||ITC shall be available only on goods imported by him.|
|11.||Supply used for Personal Consumption||Fees paid by company for income tax return of director, ITC are not available.||–|
|12.||Goods Lost, Stolen, Destroyed, Written off, free samples||During transportation, goods worth Rs. 50000.00 were lost. ITC will not be available for the goods lost during transit.||–|
|13.||Tax Paid Under Section 74, 129 & 130||When tax is paid due to fraud or willful misstatements, ITC is not available.||–|