Section 17(5): Blocked ITC – List
1. Motor vehicles and conveyances (except when used for):
• Further supply of such vehicles or conveyances;
• Transportation of passengers;
• Imparting training on driving, flying, navigating;
• Transportation of goods.
2. Vessels and aircraft (except when used for):
• Same purposes as above (further supply, transportation of passengers or goods, training).
3. Services of general insurance, servicing, repair, and maintenance related to:
• Motor vehicles, vessels, aircraft (with the same exceptions as above).
4. Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery (except where inward supply is used for making an outward taxable supply of the same category or as part of a composite/mixed supply).
5. Membership of a club, health and fitness centre.
6. Rent-a-cab, life insurance, and health insurance, except when:
• Government mandates such services for employees;
• Used for making outward taxable supply of the same category.
7. Travel benefits extended to employees on vacation (leave or home travel concession).
8. Works contract services for construction of immovable property (other than plant and machinery) except:
• When it’s an input service for further supply of works contract service.
9. Goods or services received for construction of immovable property (other than plant and machinery) on own account, including when used in the course or furtherance of business.
10. Goods or services where tax has been paid under Section 10 (Composition Scheme).
11. Goods or services received by a non-resident taxable person, except on goods imported by him.
12. Goods lost, stolen, destroyed, written off, or disposed of by way of gift or free samples.
13. Any tax paid in terms of:
• Section 74 (tax paid for fraud, willful misstatement, or suppression of facts),
• Section 129 (detention and seizure of goods),
• Section 130 (confiscation).
Key Notes:
• Plant and machinery is specifically excluded from the definition of “immovable property” for the purpose of the works contract and construction clauses, so ITC on plant and machinery is generally allowed.
• There are exceptions to many of these restrictions, and businesses should assess the nature of use before claiming ITC.
