All About Blocked Credit Under GST [Section 17(5) OF CGST ACT, 2017]

Blocked Credit Under GST [Section 17(5) OF CGST ACT, 2017]

INCLUSION:

  1. What is Blocked Credit?
  2. Items on which credit not allowed in GST.
  3. Important Notes

Very Simple Analysis of Section 17(5) of CGST Act, 2017 is as under:-

1) What is Block Credit?

Blocked credit under GST means the supply of goods and services on which the availment of credit has been restricted by the relevant provisions of law.

2) Items on which credit not allowed in GST 

a) Moter Vehicle: Motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver).

Exception:-

1. further supply of such motor vehicles; or

2. transportation of passengers; or

3. imparting training on driving such motor vehicles;

4. transportation of persons having approved seating capacity of more than thirteen persons (including the driver)

5. transportation of goods

b) Vessels and Aircraft:

Exception:- when they are used for making the following taxable supplies, namely

1. further supply of such vessels or aircraft; or

2. transportation of passengers; or

3. imparting training on navigating such vessels; or

4. imparting training on flying such aircraft;

5. transportation of goods

c) Repair & Maintenance: Services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in point (a) or point (b) above

Exception:- Provided that the input tax credit in respect of such services shall be available:-

1. where the motor vehicles, vessels or aircraft referred to in point (a) or point (b) are used for the purposes specified therein;

2. where received by a taxable person engaged—

a) in the manufacture of such motor vehicles, vessels or aircraft; or

b) in the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him

d) Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in point (a) or point (b), life insurance and health insurance

Exception:- When used for the purposes specified therein,

Provided that the input tax credit in respect  of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person 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.

e) Membership of a club, health and fitness centre and travel benefits extended to employees on vacation such as leave or home travel concession

Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any               law for the time being in force.

f) Works contract services when supplied for construction of an immovable property

Exception:- 

  1. Works Contract services Plant and Machinery
  2. where it is an input service for further supply of works contract service

g) Goods or Services or both received by a taxable person for construction of an immovable property 

Exception:- 

  1. Construction of Plant and Machinery
  2. Construction of immovable property for others

h) Goods or Services or both on which tax has been paid under section 10 i.e. Composition Levy.

i) Goods or Services or both received by a non-resident taxable person except on goods imported by him.

Exception:- 

  1. Goods Imported by him.

j) Goods or Services or both used for personal consumption.

k) Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.

l) Any tax paid in accordance with the provisions of sections 74, 129 and 130.

3) Important Notes

a) The expression “plant and machinery” means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes—

  1. land, building or any other civil structures
  2. telecommunication towers; and
  3. pipelines laid outside the factory premises.

 

Thanks & Regards

Deepesh Goyal
WhatsApp: 7404793540

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2 thoughts on “All About Blocked Credit Under GST [Section 17(5) OF CGST ACT, 2017]

  • September 20, 2020 at 3:51 am
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    Very useful article Mr. Deepesh . You have wrote article in very simple words. The same content are in many books like Vandana hangar. But you keep it concrete and concise well done.

    Reply
  • October 13, 2020 at 10:07 pm
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    Expressed Effectively

    Reply

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