Section 17(5) – Blocked Credits

a)    motor vehicles and other conveyances except when they are used–

i.        for making the following taxable supplies, namely:—

A.    further supply of such vehicles or conveyances; or

B.    transportation of passengers; or

C.   imparting training on driving, flying, navigating such vehicles or conveyances;

ii.        for transportation of goods;

b)    the following supply of goods or services or both—

i.        food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category 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;

ii.        membership of a club, health and fitness centre;

iii.        rent-a-cab, life insurance and health insurance except where––

A.    the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or

B.    such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply; and

iv.        travel benefits extended to employees on vacation such as leave or home travel concession;

a)    motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:—

A.    further supply of such motor vehicles; or

B.    transportation of passengers; or

C.   imparting training on driving such motor vehicles;

(aa) vessels and aircraft except when they are used––

i.        for making the following taxable supplies, namely:—

A.    further supply of such vessels or aircraft; or

B.    transportation of passengers; or

C.   imparting training on navigating such vessels; or

D.   imparting training on flying such aircraft;

ii.        for transportation of goods;

(ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa):

Provided that the input tax credit in respect of such services shall be available—

i.        where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein;

ii.        where received by a taxable person engaged—

I.        in the manufacture of such motor vehicles, vessels or aircraft; or

II.        in the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him;

b)    the following supply of goods or services or both—

i.        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 clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance:

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;

ii.        membership of a club, health and fitness centre; and

iii.        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.

• No ITC allowed generally.
• ITC allowed on further taxable supply
• ITC allowed on motor vehicles and other conveyances used for transport of passengers which are taxable
• ITC allowed when used for imparting taxable training services
• ITC allowed when used for transportation of goods, whether taxable or non-taxable

2.    No ITC on the following supply of goods/services–

A.    Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery

Except where used as input for providing the same category of output services.

B. membership of a club, health and fitness center

C. rent-a-cab, life insurance, and health insurance

Except where compulsory to be provided by the employer to employee

Except where used as input for providing the same category of output services.

D.   travel benefits extended to employees on vacation such as leave or home travel concession

A.      Motor Vehicles for transportation of persons –

• No ITC allowed if seating capacity is upto 13 persons
• ITC allowed if seating capacity up to 13 persons and used for further taxable supply
• ITC allowed if seating capacity up to 13 persons and used for transportation of passengers which are taxable
• ITC allowed if seating capacity up to 13 persons and used for imparting taxable training

B.      Vessels and aircraft –

• No ITC allowed generally.
• ITC allowed on further taxable supply
• ITC allowed when used for transport of passengers which are taxable
• ITC allowed when used for imparting taxable training services
• ITC allowed when used for transportation of goods whether taxable or non-taxable

C. ITC not allowed on Support services used in relation to the motor vehicles, vessels, and aircraft, on which ITC is blocked.

D.     ITC shall be allowed to the manufacturers and service providers of such goods and services respectively on which ITC is blocked for the purchaser in accordance with points mentioned above.

2.    No ITC on the following supply of goods/services–

A.        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 clause (a) or clause (aa), life insurance and health insurance

Except where used as input for providing the same category of output services.

B.      membership of a club, health and fitness center

C.     travel benefits extended to employees on vacation such as leave or home travel concession

Except where compulsory to be provided by the employer to employee.