Blocked Input Tax Credit under GST (Considering GST Amendment Act, 2018 into effect)
As we all know that CGST amendment act is made applicable wef 01 February 2019 vide notification 02/2019-Central Tax ,dt. 29-01-2019. Section 17 of CGST act provides for Apportionment of credit and inward supplies on which input credit is blocked. Changes in section 17 are made to clarify on some existing ambiguities, like explanation inserted after 17(3) to clarify the scope of exempt supply for the purpose of this section, Scope of blocked input credit on inward supply of services related to motor vehicles under section 17(5) is now limited to passenger motor vehicles etc.
Then and now position of section 17 at sub section level is as under –
17. Apportionment of credit and blocked credits
1. Input on inward supply attributable to non-business purpose.
2. Input on inward supply used for outward exempt supply.
3. Exempt supply* for sub section 2 shall include-
1. Supplies on which tax is payable under RCM by recipient.
2. Transactions in securities.
3. Sale of land.
4. Sale of building where entire consideration is received after completion certificate issued by competent authority.
*Explanation inserted vide GST amendment act 2018 – Exempt supply for this purpose shall not include activities specified in schedule III except Sale of land and sale of building where entire consideration is received after completion certificate issued by competent authority.
4. Banking companies, FI, NBFC has option* to
1. claim 50 % of their entire input credit (including Capital inputs) and rest 50% shall lapse
OR
2. Take ITC as per sub-section 2.
*option once exercised shall be irrevocable for rest of the year.
*supplies made or received within same PAN is excluded.
5. Input shall not be available in respect of –
| Supply | Exception |
| a. Motor vehicles & other conveyance for transportation of persons having approved seating capacity of not more than thirteen persons (inc driver). | i) Used for taxable supplies –
a. Used as further supply. b. Passenger Transportation. c. Training of driving, flying, navigating such conveyance. d. For transportation of goods. |
| aa. Vessels and aircraft
*Clause inserted vide GST amendment act 2018. |
i) Used for taxable supplies –
a. Further supply. b. Passenger Transportation. c. Training of flying, navigating such conveyance. 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).
*Clause inserted vide GST amendment act 2018. |
i) Used for the purposes specified therein.
ii)Recipient engaged in- a. Manufacturing of such vehicle, vessel or aircraft. or b. in the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him. |
| b. (i) Food and beverages, outdoor catering, beauty treatment, Health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft except when used for the purposes specified therein, life insurance and health insurance. | a. Used for making same category of outward supply. |
| b.(ii)Membership of club, health or fitness Centre. | None |
| b.(iii) Rent a cab, Life insurance and health insurance | a. If govt notify services that are obligatory under any law.
b. Used for same category of outward supply. |
| b.(iv) Travel benefits extended to employees on vacation. | None |
| c. Works contract services for construction of immovable property. | a. Used for supply of same category of outward supply. |
| d. Inward supply received for construction of immovable property. | a. Other than immovable property being plant & machinery. |
| e. Inward supply on which tax paid under composite scheme. | None |
| f. Inward supply received by NR | a. Goods imported by NR. |
| g. Inward supply used for personal consumption | None |
| h. goods lost, stolen, destroyed, written off or disposed of by way of gift or free, samples | None |
| i. Tax paid as result of confiscation and tax evasion. | None |
*The above provisions are elaborated in authors opinion. Interpretation of law may vary.
Author Bio
We are hiring a bus to provide conveyance to our employee, also we are taking health insurance as well as life insurance. in this case we are eligible to take input tax credit under GST amended act.
but as per my understanding section 17 of CGST Amendment Act is not yet notified as per the notification no. 02/2019-Central Tax ,dt. 29-01-2019. Please check and clarify…
Please give idea on what are the exclusion parameters for not utilising GST Credit for foreign Airlines company engaged business in India ?