Ineligible ITC under GST – Blocked Credit List, Conditions, Exceptions & FAQs

Introduction Block Credit 

As the name itself suggests, “blocked credit” means blocking or restricting the availability of input tax credit (ITC). Under GST, businesses are generally allowed to take credit of the tax paid on purchases and use it to pay output GST. However, the law helps to clearly recognizes that not every expense should be eligible for credit. Section 17(5) of the CGST Act, 2017 is the concept of blocked input tax credit which specifies certain goods and services on which ITC is expressly disallowed, even if such goods or services are used in the course or furtherance of business. In simple words, GST paid on these items becomes a cost to the business, as it cannot be adjusted against output tax liability.

The intention behind blocking credit under Section 17(5) is to prevent misuse of ITC and restrict credit on personal, luxury, or non-business-oriented expenses. For example, expenses that provide personal comfort, are used for employee welfare beyond statutory limits, or are capital in nature for personal use are kept outside the ITC framework. Therefore, blocked credit under Section 17(5) acts as an exception to the general rule of seamless credit under GST. Every registered person must carefully examine this section while claiming ITC, because wrong availment of blocked credit can lead to interest, penalties, and litigation.

In short, Section 17(5) defines where GST credit stops, ensuring that only genuine business-related taxes flow smoothly through the GST system.

What is Input Tax?

Input Tax meaning the GST amount paid by a registered person on the of purchases of goods or services used in the course or furtherance of business. In simple terminology, it is the tax you pay while buying a commodity or service, which can later be adjusted against the tax you collect on sales, subject to GST conditions.

Under GST, input tax includes:

• CGST (Central GST) charged on intra or same -state purchases
• SGST (State GST) charged on intra or same -state purchases
• UTGST (Union Territory GST) charged on purchases within Union Territories
• IGST (Integrated GST) charged on inter-state purchases

Apart from tax charged by the supplier, input tax also includes:

• Tax paid under Reverse Charge Mechanism (RCM)
• IGST paid on import of goods

All these taxes together form part of input tax, provided they are paid and used for business purposes.

Important Point

Tax paid under the Composition Scheme is NOT treated as input tax. A composition dealer cannot claim Input Tax Credit (ITC), and hence such tax is excluded from the definition of input tax.

In Simple terms,  Whenever a business buys goods or services and pays GST on commodity or service avail that GST becomes input tax for business known as ITC. If all GST rules are followed, this input tax can be claimed as Input Tax Credit (ITC) and set off against output GST liability.

Examples of Input Tax & ITC

Example 1: Normal Business Purchase

ABC Traders purchased goods worth ₹1,00,000 and paid CGST ₹9,000 + SGST ₹9,000.

• GST paid = Input Tax
• Used for taxable business supply
• ITC available = ₹18,000
• Can be adjusted against output GST

Fully eligible ITC

Example 2: Purchase for Exempt Supply

XYZ Ltd purchased raw material for making exempt goods and paid IGST of ₹15,000.

• GST paid = Input Tax
• Output supply = Exempt
• ITC = Not allowed

ITC must be reversed

Example 3: Blocked Credit

A firm purchased a car for director’s use and paid GST of ₹2,50,000.

• GST paid = Input Tax
• Covered under Section 17(5)
• ITC = Blocked

GST becomes expense

Example 4: Reverse Charge

A registered person paid GST under RCM on legal services.

• GST paid under RCM = Input Tax
• ITC available after payment
• Can be set off against output GST

RCM tax is eligible ITC

Difference Between Input Tax and Input Tax Credit (ITC)

Basis	Input Tax	Input Tax Credit (ITC)
Meaning	GST paid on purchases	Portion of input tax allowed to be claimed
Stage	Paid at time of purchase	Claimed after meeting conditions
Nature	Gross amount of GST paid	Eligible and usable amount
Eligibility	Always exists when GST is paid	Subject to Sections 16 & 17
Blocked Credit	Included	Not allowed
Set-off	Cannot be set off directly	Can be adjusted against output tax

All ITC is input tax, but all input tax is NOT ITC.

Key Points to Remember 

1. Input tax includes CGST, SGST, UTGST, IGST 
2. Includes RCM tax and IGST on imports 
3. Excludes tax paid under Composition Scheme 
4. ITC is allowed only for business + taxable supplies 
5. Blocked credits under Section 17(5) are never allowed

Overview of Section 17 – Apportionment of Credit (CGST Act, 2017)

SS	Description	Overview / Explanation
1	Business and non-business	ITC is allowed only to the extent goods or services are used for business purposes. If partly used for non-business (personal use), ITC must be proportionately reversed.
2	Taxable and Exempt Supply	When inputs are used for both taxable and exempt supplies, ITC relating to exempt supplies is not allowed and must be reversed proportionately.
3	Exempt supply includes?	Exempt supply includes: ·         Nil-rated supplies ·         Wholly exempt supplies ·         Non-taxable supplies  ·         Supplies on which recipient pays tax under RCM ·         Sale of land and completed buildings
4	For Banks, FIs and NBFCs	Banks, Financial Institutions, and NBFCs can opt to claim only 50% of eligible ITC every month. The balance 50% is treated as ineligible (Rule 38).
5	Blocked Credits	Certain goods and services are specifically blocked under Section 17(5) (e.g., motor vehicles, food & beverages, construction, personal consumption, gifts, etc.), even if used in business.
6	Government	For government or local authorities, ITC is available only when they are registered and making taxable supplies. ITC relating to exempt or sovereign functions is not allowed.

Classification of Inputs under GST

Under the GST law, everything on which a business pays tax is broadly classified into three categories— Inputs, Capital Goods, and Input Services. This classification is important because Input Tax Credit (ITC) rules, usage, and reversals depend on how an item is classified.

All these categories must be used in the course or furtherance of business to be eligible for ITC.

1. Inputs - Inputs refer to goods (other than capital goods) that are used or intended to be used in the business.
• Examples: 
• Raw materials
• Packing materials
• Consumables
• Trading goods
• A manufacturer purchasing steel to produce machinery steel is treated as input.
2. Capital Goods - Capital goods are goods used in business whose value is capitalized in the books of accounts and on which depreciation is claimed.
• Examples:
• Plant and machinery
• Heavy equipment
• Computers and servers
• Office machinery
• A construction company purchasing an excavator this is treated as capital goods. ITC on capital goods is generally allowed in full, subject to conditions and Section 17(5) restrictions.
3. Input Services - Input services mean services used or intended to be used in the course or furtherance of business.
• Examples:
• Legal and professional services
• Audit fees
• Advertising and marketing services
• Security, consultancy, and manpower services
• Audit fees paid to a CA firm are treated as input services.

For Furtherance of Business – Key Condition

All inputs, capital goods, and input services must be used for business purposes. If they are used partly for personal or exempt purposes, proportionate ITC reversal is required under Section 17.

Why This Classification Matters

• Determines eligibility of ITC
• Helps in correct accounting treatment
• Affects reversal under Rules 42 & 43
• Important for GST audits and assessments

In Simple Words, Anything you buy (goods or services) for your business falls into one of these three categories. Correct classification ensures proper ITC claim and avoids GST disputes.

Conditions for Taking Input Tax Credit (ITC) (Section 16 of the CGST Act)

To claim ITC, all conditions must be satisfied simultaneously. If even one condition fails, ITC is not available.

Condition No. 1 – Valid Tax Invoice / Debit Note

Requirement

• Seller must have actually supplied goods or services
• Buyer must possess a valid tax invoice / debit note issued as per GST rules

ITC Not Available If

• Invoice is fake or incomplete
• Supplier is non-existent
• Invoice not reported by supplier

Example 

Invoice received from registered supplier for office furniture → Condition satisfied

Condition No. 2 – Receipt of Goods or Services

Requirement

• Buyer must receive the goods or services.

Receipt includes:

• Physical receipt by buyer
• Receipt by agent or third party on buyer’s direction

ITC Not Available If

• Only invoice received but goods not received

Example

Laptop invoiced but not delivered → ITC not available

Condition No. 3 – Tax Must Be Paid to Government

Requirement

GST charged must be actually paid to the Government by the supplier:

• In cash, or
• Through ITC (credit ledger)

ITC Not Available If

• Supplier collected GST but did not deposit it

Example

Supplier filed invoice but defaulted in tax payment → ITC blocked to buyer

Condition No. 4 – Return Must Be Filed

Requirement

• Buyer must file: GSTR-3B (mandatory)

ITC Not Available If

• Return not filed

Example

Eligible ITC exists but GSTR-3B not filed → ITC cannot be availed

Condition No. 5 – Goods Received in Lots / Installments

Requirement

• If goods are received in multiple lots or installments, ITC can be claimed only after receipt of the last lot.

Example

Machinery ordered in 3 parts:

• Lot 1 received → ITC not available
• Lot 2 received → ITC not available
• Lot 3 received → ITC available for entire invoice

Condition No. 6 – Depreciation on GST Component

Requirement

• If depreciation is claimed on GST portion of capital goods under Income Tax, ITC is not allowed.

ITC Not Available When

• Cost capitalised = Actual price + GST

ITC Available When

• Cost capitalised = Actual price only (GST excluded)

Capitalisation Method	ITC Status
Cost = ₹10,00,000 + GST ₹1,80,000	ITC not allowed
Cost = ₹10,00,000 only	ITC allowed

Quick Summary Table of Conditions for Taking Input Tax Credit (ITC)

Condition	Status
Valid invoice	Mandatory
Receipt of goods/services	Mandatory
Tax paid to Govt	Mandatory
Return filed	Mandatory
Last lot received	Mandatory (if installments)
No depreciation on GST	Mandatory

Final Takeaway 

1. ITC is a conditional benefit, not a right 
2. Failure of any one condition = ITC denied 
3. Documentation + compliance = key to ITC safety

Blocked Credit – ITC Not Available for Certain Goods & Services (Section 17(5) – Negative List of ITC)

Input Tax Credit (ITC) is not available on certain goods and services even if they are used in the course or furtherance of business. These are commonly called Blocked Credits.

Let’s divide them broadly 

1. Personal Purpose – Goods & Services Used for Personal Consumption

Principle 

If goods or services are used for personal use, ITC is not allowed, even if purchased in the name of business.

Blocked Examples

• Food & beverages
• Outdoor catering
• Beauty treatment, cosmetic & plastic surgery
• Health services
• Life & health insurance
• Club, gym, fitness centre membership
• Travel benefits to employees on vacation (LTC / Home Travel)

ITC Allowed Only If

1. It is mandatory under any law (e.g., employee insurance under labour laws)
2. Used for making outward taxable supply of the same category

Example

1. A company provides free lunch to employees → ITC blocked
2. But if a catering business purchases food supplies → ITC allowed

2. Not for Further Sale (Motor Vehicles, Vessels & Aircraft)

Principle

When goods are not meant for resale or further supply, ITC is restricted.

Blocked Goods / Services

• Motor vehicles for transportation of persons (≤ 13 seats)
• Vessels & aircraft
• Insurance, repair & maintenance of above

ITC Allowed If Used For

• Further supply (sale) of motor vehicles
• Transportation of passengers
• Training on driving, flying, navigating
• Transportation of goods

Example

1. Car purchased by CA firm for partner → ITC blocked
2. Car purchased by car dealer for resale → ITC allowed

3. For Immovable Property (Construction Related)

Principle

ITC is not allowed on goods/services used for construction of immovable property, if capitalised.

Blocked ITC Covers

• Construction of office building
• Factory building
• Godown
• Interior works (if capitalised)

Construction includes reconstruction, renovation, additions, alterations if capitalised.

ITC Allowed If

• Immovable property is constructed for further supply (e.g., builder constructing flats for sale before completion)
• Plant & machinery (specifically excluded from immovable property)

Example

1. ITC on cement & steel used to construct own office → Blocked
2. ITC on plant & machinery installed in factory → Allowed

4. Towers, Pipelines & Similar Fixed Structures

Principle

Even though used for business, ITC is specifically blocked by law.

Blocked Items

• Telecom towers
• Pipelines laid outside factory premises
• Fixed civil structures attached to earth

Example

1. Telecom company constructing mobile tower → ITC blocked
2. Pipeline laid outside factory for gas supply → ITC blocked

Category	Reason for Blocking ITC	Examples
Personal purpose	Not used for business	Food, insurance, club
Not for resale	End-use consumption	Cars, aircraft
Immovable property	Capital asset	Buildings, offices
Towers & pipelines	Specifically restricted	Telecom towers

Key Points to Remember Business use alone is not enough to claim ITC. If an item falls under Section 17(5), ITC is blocked even if GST is paid.

Last Date of Availing ITC, Reversal of ITC (180-Day Rule) & Interest Liability under GST

Input Tax Credit (ITC) under GST is not an automatic right. It is allowed only when time limits and conditions prescribed under the GST law are strictly followed. Let us understand three very important compliance aspects:

1. Last Date of Availing Input Tax Credit (Section 16(4) of CGST Act)

Legal Provision

ITC relating to any invoice or debit note of a financial year cannot be availed after the earlier of:

1. 30th November following the end of that financial year, OR
2. Date of filing Annual Return (GSTR-9) for that financial year

Whichever is earlier becomes the final cut-off date.

Example

• Invoice date: 01-11-2019
• Financial Year: 2019-20
• Relevant deadlines:
• 30-11-2020
• Date of filing GSTR-9 for FY 2019-20

ITC can be claimed only up to the earlier of the above two dates.

After this date, ITC lapses permanently, even if all other conditions are satisfied.

Key Point

Even if:

• Goods are received
• Invoice is valid
• Tax is paid

ITC will be lost forever if not claimed within the prescribed time limit.

2. Reversal of ITC – 180 Days Payment Rule (Second Proviso to Section 16(2))

Legal Provision

If the recipient fails to pay the supplier the value of supply + GST within 180 days from the invoice date, then:  ITC already claimed must be reversed

Example

• Invoice date: 01-11-2019
• Last date for payment: 180 days from invoice
• Payment not made within 180 days

ITC availed earlier must be reversed in GSTR-3B for the month in which 180 days expire.

Re-Availment of ITC

Once payment is actually made to the supplier after 180 days:

1. ITC can be re-availed (re-credited)
2. Section 16(4)-time limit does not apply for such re-credit

Important Notes

• 180-day rule does not apply to: Supplies liable to Reverse Charge (RCM)
• Rule applies only to normal forward-charge supplies

3. Interest Liability on Reversal of ITC

• Rate of Interest
• 18% per annum
• Period for Interest Calculation

Interest is payable:

From the date ITC was originally availed

Till the date ITC is reversed in return

Example

• ITC availed in January
• Payment not made within 180 days
• ITC reversed in July

Interest @ 18% p.a. payable from January to July

Summary Table of Last Date of Availing ITC, Reversal of ITC (180-Day Rule) & Interest Liability under GST

Particular	Rule
Last date to avail ITC	Earlier of 30 Nov or GSTR-9 filing
Payment to supplier	Within 180 days
Non-payment within 180 days	ITC reversal required
Interest rate	18% per annum
Re-credit after payment	Allowed

Final Takeaways: ✔ ITC is time-bound and condition-based ✔ Delay in claiming ITC = permanent loss ✔ 180-day rule causes temporary reversal + interest ✔ Timely payment and return filing are critical for ITC compliance

Ineligible ITC on Certain Services under GST (Section 17(5) – Blocked Credit)

Under GST, Input Tax Credit (ITC) is specifically blocked on certain services even if they are used in the course or furtherance of business. These services are treated as personal consumption or employee welfare expenses, and therefore fall in the negative list of ITC.

Let us understand each category clearly.

Food & Beverages

ITC Not Available When

• Food or drinks are provided to:
• Employees
• Directors
• Guests
• Free meals, tea, snacks, refreshments, etc.

ITC Available When

• The same service is used for making outward taxable supply of food & beverages. Example: Restaurant, hotel, catering business

Example

1. Company provides free lunch to employees → ITC not allowed
2. Restaurant purchases raw food material → ITC allowed

Outdoor Catering

ITC Not Available When

• Catering services provided for:
• Office events
• Employee welfare
• Meetings or celebrations

ITC Available When

• Catering service is used for further supply of catering service
• Or mandatory under any law (rare cases)

Example

1. Caterer hired for staff party → ITC blocked
2. Caterer buying catering service for resale → ITC allowed

Beauty Treatment

ITC Not Available

• Salon services
• Spa treatments
• Grooming services for employees or management

ITC Available When

• Beauty treatment is the core business activity

Example

• Salon service for company director → ITC not allowed
• Beauty parlour purchasing beauty services → ITC allowed

Health Services

ITC Not Available When

• Medical check-ups
• Doctor consultations
• Health care benefits provided to employees

ITC Available When

• Health services are:
• Mandatory under any law, or
• Used for making outward taxable supply of health services

Example

1. Company-sponsored health check-up → ITC blocked
2. Hospital availing medical services → ITC allowed

Cosmetic & Plastic Surgery

ITC Not Available

• Cosmetic surgery
• Aesthetic or plastic surgery
• Non-medical procedures

ITC Available When

• Surgery is required due to:
• Congenital defect
• Injury
• Trauma
• Medical necessity

Example

1. Cosmetic surgery for appearance → ITC not allowed
2. Surgery due to accident injury → ITC allowed

Practical Insight: ITC is available only if the service is used for providing the same type of outward taxable service. Otherwise, ITC remains blocked, irrespective of: • Business use • GST paid • Proper invoice

Service Category	ITC Status
Food & beverages	Blocked
Outdoor catering	Blocked
Beauty treatment	Blocked
Health services	Blocked
Cosmetic surgery	Blocked
Same service used for resale	Allowed

Rent-a-Cab Service

ITC Not Available When

• Cab facility is provided:
• As a staff benefit
• For office convenience
• Without any statutory obligation

ITC Available When

• Rent-a-cab service is used for providing the same outward taxable service, OR
• Cab facility is mandatory under any law for the employer

Example

1. Office provides cab facility to employees → ITC not allowed
2. Cab operator hiring another cab for business → ITC allowed

Life Insurance

ITC Not Available When

• Life insurance taken voluntarily for:
• Employees
• Directors
• Management

ITC Available When

• Life insurance is:
• Used for providing same taxable insurance service, OR
• Mandatory under any Government law for employees

Example

1. Company takes optional life insurance policy for staff → ITC blocked
2. Insurance company purchasing re-insurance → ITC allowed

Health Insurance

ITC Not Available When

• Mediclaim or health insurance provided as:
• Per company policy
• Employee welfare benefit

ITC Available When

• Health insurance is:
• Mandatory under law (e.g., labour laws), OR
• Used for making outward taxable supply of insurance services

Example

1. Optional group health policy for employees → ITC not allowed
2. Mandatory employee insurance under statute → ITC allowed

ITC is available only in two situations: 

1. When the service is used for providing the same type of outward taxable service 
2. When providing such service is compulsory under Government law If neither condition is satisfied, ITC is blocked, even if: 
• GST is paid 
• Invoice is proper 
• Expense is for business

Service	ITC Status
Rent-a-cab	Conditional
Life insurance	Conditional
Health insurance	Conditional
Voluntary employee benefit	Not allowed
Mandatory under law	Allowed

Ineligible ITC on Works Contract & Construction of Immovable Property (Section 17(5)(c) & 17(5)(d) of CGST Act)

Under GST, Input Tax Credit (ITC) related to construction activities is specifically restricted because such expenses result in creation of immovable property, which is considered a capital asset for self-use.

Let us understand both categories clearly.

Works Contract Service

Meaning

Works contract includes construction, fabrication, erection, installation, repair, renovation or alteration of an immovable property involving transfer of property in goods.

ITC Not Available When

• Works contract service is used for:
• Construction of own office
• Factory building
• Godown
• Residential or commercial building

ITC Available When

• Works contract service is used for providing the same type of outward works contract service

Example

1. Company hires contractor to build its office → ITC not allowed
2. Main contractor hires sub-contractor → ITC allowed

Goods & Services Used for Construction of Immovable Property (Own Use)

Includes

• Cement, steel, bricks
• Architect & interior designer fees
• Construction labour
• Consultancy charges (when capitalised in books)

ITC Not Available When

• Construction is for own use
• Property is capitalised as an asset
• Used for business or personal purpose (both covered)

ITC Available When

• Used for construction of plant & machinery
• Immovable property is constructed for further supply (e.g., builder selling flats before completion)

Example

1. Cement used for office building →  ITC blocked
2. Machinery foundation & installation →  ITC allowed

Special Exception – Plant & Machinery

ITC Available For

• Plant & machinery used in factory or business operations

ITC Not Available For

• Land
• Building
• Civil structures
• Telecommunication towers
• Pipelines laid outside factory premises

Common Logic Behind Blocking ITC

GST law does not allow ITC where the expenditure:

1. Creates an immovable asset, and
2. Is used for own consumption, not for outward taxable supply

Particular	ITC Status
Works contract for own building	Not allowed
Sub-contracted works contract	Allowed
Construction of office / factory	Not allowed
Construction of plant & machinery	Allowed
Inputs capitalised in books	Not allowed

Ineligible ITC under GST – Special Situations 

Apart from commonly known blocked credits like food, motor vehicles, or construction, GST law also denies ITC in certain special situations, irrespective of business use. These cases are clearly shown in the image and explained below.

Composition Scheme

 ITC Not Available

• A composition dealer is not eligible to claim ITC on any inward supply.
• Also, buyers purchasing from a composition dealer cannot claim ITC because tax is paid at a concessional rate.

Example

1. Trader under composition scheme buys goods →  No ITC
2. Registered buyer purchases from composition dealer →  No ITC

Non-Resident Taxable Person (NRTP)

 ITC Not Available

• Non-Resident Taxable Person cannot avail ITC on inward supplies.

 Exception

• ITC is allowed only on import of goods

 Example

1. NRTP pays GST on hotel or local services →  ITC not allowed
2. NRTP imports goods into India →  ITC allowed

Personal Consumption

 ITC Not Available

• Goods or services used for personal use of:
• Proprietor
• Partners
• Directors
• Employees

Even if purchased in the name of business, ITC is blocked.

Example

1. Mobile phone purchased for personal use →  ITC not allowed
2. Household items bought through firm →  ITC blocked

Free Samples, Lost, Stolen or Destroyed Goods

ITC Not Available On

• Free samples distributed
• Goods lost or stolen
• Goods destroyed due to fire, accident, etc.
• Goods written off in books

Example

1. Medicines given as free samples →  ITC blocked
2. Stock destroyed in fire →  ITC not allowed

Fraud Cases

ITC Not Available

When tax is paid due to:

• Fraud
• Wilful misstatement
• Suppression of facts
• Detention or confiscation of goods

Example

• GST paid after fraud notice →  ITC cannot be claimed

Common Logic Behind These Restrictions

ITC is denied where:

• Tax payment is penal in nature, or
• Goods/services are not used for taxable outward supply, or
• Special category of person is involved

GST law intentionally blocks ITC to prevent misuse and revenue loss.

Category	ITC Status
Composition scheme	Not allowed
Non-resident taxable person	Except imports
Personal consumption	Not allowed
Free samples / destroyed goods	Not allowed
Fraud cases	Not allowed

Practical Insight:✔ ITC is a conditional benefit, not a right ✔ Special categories override normal ITC rules ✔ Business use alone does not guarantee ITC ✔ Always check Section 17(5) + person category

Ineligible ITC on Motor Vehicles & Other Conveyance (Section 17(5)(a) of CGST Act)

Passenger Transport Vehicles

1. Vehicles with Seating Capacity Up to 13 Passengers
2. ITC Not Available
3. ITC is not allowed on motor vehicles used for transportation of persons having seating capacity up to 13 (including driver).

ITC Available Only If Used For:

• Further supply of vehicles (sale of vehicles)
• Transportation of passengers
• Motor driving training institute

Example

• Car purchased by CA firm for partner use →  ITC not allowed
• Taxi operator purchasing car →  ITC allowed
• Driving school purchasing car →  ITC allowed

Passenger Vehicles with Seating Capacity More Than 13

ITC Available

• ITC is allowed on motor vehicles used for transportation of persons having more than 13 passengers.

Example

1. Bus used by transport company →  ITC allowed
2. Staff bus having 40 seats →  ITC allowed

Goods Transport Vehicles / Goods Transport Agency (GTA)

ITC Available

• ITC is allowed on motor vehicles used for transportation of goods, including vehicles used by Goods Transport Agency (GTA).

Example

• Truck purchased by logistics company →  ITC allowed
• Tempo used for goods delivery →  ITC allowed

Category	ITC Status
Passenger vehicles ≤ 13 seats	Blocked
Passenger vehicles > 13 seats	Allowed
Goods transport vehicles	Allowed
Taxi, passenger transport service	Allowed
Driving training institute	Allowed

Practical Insight: 

1. Seating capacity is the primary deciding factor 
2. Personal or office-use cars → ITC blocked 
3. Commercial passenger & goods transport → ITC allowed 
4. Exceptions override the general restriction

Section 17(5) – Complete Negative List of ITC (Blocked Credit)

Sl. No.	Goods / Services	ITC Not Available When	ITC Available When (Exception)	Practical Example
1	Motor Vehicles & Conveyances  (incl. vessels & aircraft)	Used for transport of persons (≤13 seats)	Further supply, passenger transport, training, transport of goods	Car for director (not allowed) Car dealer for resale (allowed)
2	Insurance, Repair & Maintenance of Vehicles	Related to blocked motor vehicles	Vehicle itself eligible for ITC	Car servicing for office (not allowed)
3	Food & Beverages	Personal or employee consumption	Used for same outward taxable supply	Free lunch (not allowed) Restaurant raw material (allowed)
4	Outdoor Catering	Office functions, staff welfare	Mandatory under law or same service resale	Staff party (not allowed)
5	Beauty Treatment	Personal grooming or wellness	Beauty service business	Director salon (not allowed)
6	Health Services	Employee health check-ups	Mandatory under law or hospital business	Medical camp (not allowed)
7	Cosmetic & Plastic Surgery	For appearance or lifestyle	Due to injury, trauma, congenital defect	Cosmetic surgery (not allowed)
8	Club, Gym & Fitness Membership	Recreation or personal benefit	No general exception(not allowed)	Gym fees (not allowed)
9	Rent-a-Cab	Optional employee transport	Mandatory under law or same service outward	Office cab (not allowed)
10	Life Insurance & Health Insurance	Optional employee benefit	Mandatory under law	Mandatory ESIC (allowed)
11	Travel Benefits to Employees	LTC, vacation, leave travel	No exception(not allowed)	Holiday reimbursement (not allowed)
12	Works Contract Services	Construction of own immovable property	Further supply of works contract	Office construction (not allowed)
13	Goods & Services for Construction	Capitalised immovable property	Plant & machinery	Cement for office (not allowed)
14	Immovable Property	Own office, factory, building	For further supply (builder before OC)	Own building (not allowed)
15	Plant & Machinery (Exception)	–	Always ITC allowed (except civil structure)	Factory machine (allowed)
16	Telecom Towers	Always blocked	No exception(not allowed)	Mobile tower (not allowed)
17	Pipelines outside factory	Always blocked	No exception (not allowed)	External pipeline (not allowed)
18	Goods Lost / Stolen / Destroyed	Written off or free samples	No exception (not allowed)	Expired stock (not allowed)
19	Free Samples & Gifts	Distributed free	No exception (not allowed)	Promotional gifts (not allowed)
20	Personal Consumption	Personal use	No exception (not allowed)	Personal laptop (not allowed)
21	Composition Dealer Purchases	Supplier under Sec 10	No exception (not allowed)	Purchase from comp. dealer (not allowed)
22	NRTP (Non-Resident Taxable Person)	All inward supplies	Import of goods only	NRTP services (not allowed)
23	Tax paid due to Fraud / Suppression	Demand due to fraud, seizure	No exception (not allowed)	Fraud demand (not allowed)
24	Depreciation on GST Portion	GST capitalised & depreciation claimed	GST excluded from cost	Capital asset with GST (not allowed)
25	180 Days Non-Payment	Supplier not paid in 180 days	Re-credit after payment	Delay payment (not allowed) → (allowed)

FAQ's

Is ITC allowed on rent-a-cab and insurance services?

ITC is not allowed, except when: 

1. The same service is used for outward taxable supply, or 
2. Providing such service is mandatory under Government law.

Can ITC be claimed on construction of office or factory?

No. ITC on works contract services and goods/services used for construction of immovable property for own use is blocked, except for plant and machinery.

Is ITC available on goods given as free samples?

No. ITC is not available on goods that are: 

1. Given as free samples 
2. Lost or stolen 
3. Destroyed 
4. Written off in books

Can a composition dealer claim ITC?

No. A composition dealer cannot claim ITC, and buyers purchasing from a composition dealer also cannot claim ITC.

Is ITC available to a Non-Resident Taxable Person (NRTP)?

ITC is not allowed to NRTP, except on import of goods.

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