ITC of tax paid on almost every inputs and input services used for taxable supply of taxable goods or services or both is allowed under GST except a small list of items provided u/s. 17(5) of CGST Act.
List given under section is discussed below:
(a) Motor vehicles & Conveyance except when used for
- For transportation of goods e.g. Motor vehicles & conveyance used by Goods transportation agency, courier agency etc.
- For making following taxable supplies:
> Further supply of such vehicle or conveyance e.g. for car dealers.
> For transportation of passenger e.g. travels agency, airlines agency etc.
> For imparting training e.g. motor driving schools.
(b) Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where
- Inward supply of these is used for making an outward supply of same category or as an element of a taxable composite or mixed supply.
(c) Membership of club, health & fitness center.
(d) Rent a cab, life insurance and health insurance except where
- The government has made it obligatory for an employer to provide any of these services to its employees
- Inward supply of these services is used for making an outward supply of same category or as element of a taxable composite supply or mixed supply.
(e) Travel benefits to employees on vacation such as Leave travel concession or home travel concession e.g. foreign trip provided to employee on leave.
(f) Works contract services for construction of immovable property except when
- It is input service for further supply of works contract service e.g. Subcontract
- Immovable property is plant and machinery i.e. ITC on works contract services used for construction of immovable plant and machinery is available.
Inward supply received by a taxable person for the construction of an immovable property (other than plant and machinery) on his own account even when such supplies are used in the course of or furtherance of business.
- e.g. when a company purchases material to construct a house for his use on his own account, ITC on material purchased is not allowed as credit. But when a company purchases material to construct a house for someone other’s use,(construction business), ITC on material purchased is allowed as credit.
(h) Inward supplies on which tax has been paid under Composition scheme.
(i) Inward supplies received by Non Resident taxable person except goods imported by him.
- e.g. Goods imported by Non resident taxable person is chargeable under customs which includes IGST paid by him, credit of which is available to Non resident taxable person.
(j) Goods or services used for personal consumption.
(k) Goods that are lost, stolen, destroyed, written off, or disposed of by way of free samples or gift.
(l) Tax paid u/s. 74(Fraud), 129(Seize), 130(Confiscation).
(The author can be reached at email@example.com