Blocked Credit: Goods and Services on which ITC is Blocked
There are specific goods and services in GST Regime where Businesses cannot claim GST Input Tax Credit. Understanding these restrictions is crucial for every business owner. Let’s unravel the mystery of what you can’t claim under GST and why it matters for your business!
Specific Goods and Services Where ITC Is Blocked:
1. Motor Vehicles:
- Businesses cannot claim ITC for GST paid on purchase of motor vehicles used for transportation of passengers having approved seating capacity of less than 13 persons (including driver).
- Services of General insurance, Servicing, Repair and Maintenances on motor vehicles as specified above.
- Leasing, renting or hiring of motor vehicles.
2. Food and Beverages: Expenses on food and beverages provided to employees, guests, or customers fall under blocked credit. This includes office snacks, employee meals, and any catering services for non-business events.
3. Services relating to Outdoor Catering Services, Beauty Treatment, health services, cosmetic and plastic surgery
4. Health and Life Insurance Premiums: Payments made towards health and life insurance premiums for employees are not eligible for ITC. While employee welfare is important, GST does not allow businesses to claim credit on these expenses.
5. Travel Benefits to Employees: Any travel-related perks provided to employees, especially during vacations, do not qualify for ITC. This includes expenses related to holiday packages, airline tickets, or accommodation for employee leisure.
6. Club Memberships: Membership fees paid for clubs, health and fitness centers, or similar establishments are not eligible for GST credit. Even if these memberships are meant for employee recreation, they fall under blocked credit.
7. Construction of an Immovable Property :
- Works Contract Services: 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;
- Goods or Services or both 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 or both are used in the course or furtherance of business.
Explanation.- “Construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property;
However, that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
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