Block Credit List Under GST Section 17(5)

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Block Credit List Under GST

Understanding which Input Tax Credits (ITC) are ineligible under the Goods and Services Tax (GST) is crucial for maintaining accurate compliance and avoiding potential penalties. In this article, we explore the block credit list as defined under Section 17(5) of the CGST Act. We explain the key categories of blocked ITC, the reasons behind these restrictions, and provide practical guidance for businesses. The detailed table below summarizes the blocked ITC categories, along with their descriptions and exceptions.

What Is Block Credit Under GST?

Block credit, often referred to as blocked ITC, represents the credit that a taxpayer is not allowed to claim under GST. This mechanism helps ensure that ITC is utilized only for legitimate business-related expenses and prevents misuse for personal or non-taxable activities. Block credit is primarily governed by Section 17(5) of the CGST Act, which specifies various categories of expenditures where the ITC cannot be claimed.

Block Credit List: Categories and Descriptions

The following table provides a clear and concise summary of the blocked ITC categories under Section 17(5) of the CGST Act, including descriptions and any exceptions.

S.No	Blocked ITC Category	Description	Exceptions / Remarks
1	Motor Vehicles & Other Conveyances	ITC is not available on GST paid for the purchase of passenger vehicles (and similar conveyances) with seating capacity of 13 or fewer, including vessels and aircraft.	ITC may be claimed if the vehicle is used for (a) transportation of passengers/goods, (b) further supply (e.g., dealer’s stock), or (c) imparting driving/flying training.
2	Insurance, Servicing, Repair & Maintenance for Vehicles	ITC on GST paid for services like insurance, repairs, maintenance, or servicing of vehicles, vessels, and aircraft is disallowed.	ITC is available if the vehicle is used for eligible business activities as per exceptions in Category 1.
3	Food & Beverages, Outdoor Catering, and Personal Services	ITC is blocked on GST paid for goods/services related to food, beverages, outdoor catering, beauty treatments, health services, and cosmetic procedures.	Allowed only if these services are used for making further taxable supplies or provided as mandated by law, such as employer-mandated welfare benefits.
4	Club Memberships, Gym & Fitness Center Fees	ITC on membership fees for clubs, gyms, and fitness centers is not claimable.	ITC may be available if the expenditure is legally mandated for employee welfare.
5	Travel Benefits	ITC is disallowed on travel expenses or benefits provided to employees for personal reasons, such as leave or home travel concessions.	No exceptions unless specific government directives provide relief.
6	Works Contract/Construction of Immovable Property	ITC is blocked on GST for goods or services used in constructing immovable property on one’s own account.	Exceptions exist if the inputs are used in the construction of plant and machinery or for further supply under a works contract.
7	Purchases under Composition Scheme	Taxpayers opting for the composition scheme are not eligible to claim ITC on any purchases.	No exceptions; the composition scheme precludes ITC claims entirely.
8	Non-Resident Taxable Persons	ITC is not available on goods or services acquired by non-resident taxable persons, except for imports.	ITC is claimable only on imported goods.
9	Goods/Services for Personal Use	ITC is not available on purchases used for non-business (personal) purposes.	If goods are used partly for business, only the business portion is eligible for ITC.
10	Free Samples & Goods Lost, Stolen, or Written Off	ITC is blocked on goods provided as free samples or those that are lost, stolen, damaged, or written off.	No exceptions allowed as such items have been removed from the supply chain.
11	Fraudulent ITC Claims	If ITC is claimed on account of fraud, willful misstatement, or suppression of facts, it must be reversed.	No exceptions; ITC under such circumstances must be fully reversed with applicable interest and penalties.