Summary
Section 17(5): Specifies goods and services on which ITC is blocked (not available).
Section 16(4): Specifies the time limit for availing ITC, which is up to the due date
for filing the September return of the following financial year or the date of filing the
annual return, whichever is earlier.
Section 17(5) - Blocked Credits
Section 17(5) of the CGST Act, 2017, specifies certain goods and services on which ITC is
not available, commonly known as "blocked credits." These provisions aim to restrict ITC on
certain types of expenses, which are outlined below:
1. Motor Vehicles and Conveyances:
o ITC is not available on motor vehicles and conveyances except when they are
used for:
Further supply of such vehicles or conveyances.
Transportation of passengers.
Imparting training on driving, flying, navigating such vehicles or
conveyances.
Transportation of goods.
2. Food and Beverages, Outdoor Catering, Beauty Treatment, Health Services,
Cosmetic and Plastic Surgery:
o ITC is not available for these services unless they are used for making an
outward taxable supply of the same category.
3. Membership of a Club, Health, and Fitness Centre:
o ITC is not available on membership fees for clubs, health, and fitness centers.
4. Rent-a-Cab, Life Insurance, and Health Insurance:
o ITC is blocked unless these services are:
Obligatory for an employer to provide to its employees under any law
for the time being in force.
5. Travel Benefits Extended to Employees:
o ITC is not available on travel benefits extended to employees on vacation,
such as leave or home travel concession.
6. Works Contract Services:
o ITC on works contract services is blocked when supplied for construction of
an immovable property (other than plant and machinery), except where it is an
input service for further supply of works contract service.
7. Goods or Services for Construction:
o ITC is blocked on goods or services received by a taxable person for
construction of an immovable property (other than plant or machinery) on his
own account, including when such goods or services are used in the course or
furtherance of business.
8. Composition Scheme:
o ITC is not available for goods and services on which tax has been paid under
the composition scheme.
9. Non-Compliance of Section 41 or Section 43:
o ITC is blocked if the tax is paid under Section 10 or if the supplier has not
made the payment of tax within a specified period.
10. Goods or Services Used for Personal Consumption:
o ITC is blocked on goods or services used primarily for personal consumption.
11. Goods Lost, Stolen, Destroyed, Written off, or Disposed of by Way of Gift or
Free Samples:
o ITC is not available on these goods.
Section 16(4) - Time Limit for Availing Input Tax Credit
Section 16(4) of the CGST Act, 2017, specifies the time limit within which a registered
person can avail ITC. Here are the key points:
1. Time Limit:
o A registered person shall not be entitled to take ITC in respect of any invoice
or debit note for the supply of goods or services or both after:
The due date of furnishing the return under Section 39 for the month of
September following the end of the financial year to which such
invoice or debit note pertains, or
The furnishing of the relevant annual return,
Whichever is earlier.
ITC Restricted due to PoS (Place of Supply) Rule:
Summary
Place of Supply Rules: Determine the location where goods or services are supplied
and the applicable type of GST (CGST/SGST or IGST).
ITC Restrictions: Occur when the incorrect type of GST is charged based on the
place of supply, preventing the recipient from claiming ITC.
Compliance: Proper understanding and application of PoS rules are crucial for both
suppliers and recipients to ensure correct tax levies and ITC claims.
