FMCG    PE  = > AN EASY TO REMEMBER “SHORT FORM “ FOR BLOCKED CREDIT UNDER GST      

BLOCKED INPUT TAX CREDIT

As per amended section 17 of CGST Act which is applicable from 01-02-2019, A registered taxpayer is not entitled to avail of the credit of taxes paid in respect of certain goods or services, even if these goods or services are used in the course or furtherance of business. We have made an Acronym (An easy to remember Short form for Beginners) to memorize easily list of those items where ITC is not available under GST.  That is FMCG PE . Here is goes.

LIST OF BLOCKED CREDIT –   INPUT TAX CREDIT SHALL NOT BE AVAILABLE IN RESPECT OF THE FOLLOWING SUPPLY OF GOODS OR SERVICES

1. F-FOOD BEVERAGES & OTHER

No ITC on the following supply when supplied to Employees –   Food and beverages, outdoor catering, beauty treatment, health services, cosmetic treatment (Unless Obligatory).

 2. M-MOTOR VEHICLES FOR PASSENGERS TRANSPORTATION

No ​​ITC allowed for​Motor Vehicles for transportation of persons if seating capacity is upto 13 persons However,

  • ITC is allowed if seating capacity up to 13 persons and used for further taxable supply of such vehicles
  • ITC is  allowed if seating capacity up to 13 persons and used for transportation of passengers which are taxable
  • ITC is allowed if seating capacity up to 13 persons and used for imparting taxable training

Moreover,​ No ITC  allowed on general insurance, servicing, repair and maintenance services used in relation to the motor vehicles on which ITC is blocked  ​.

ITC of Motor vehicles used in Goods Transportation is always allowed. Also, ITC of general insurance, servicing, repair and maintenance is also allowed in this case (Provided,

1. You are charging Freight in your invoice & levying GST on Forward charges basis in your invoice or

2. You are Selling your Products in inclusive Freight price model where GST charged on bundle price  or

3. You are not charging any Freight and using vehicle just for Goods transportation for your business purpose only e.g Goods delivery to customer door step without charging anything Or Pick up of raw material or Moving Goods from one place to another or  any other purpose. These are just illustrations. )

Moreover, ITC will be available in respect of motor vehicles if they are used for transportation of money for or by a banking company or a financial institution.

3. C-CONSTRUCTION

No ITC of Works contract services when supplied for construction of immovable property: ITC not available to a registered person for the tax paid on the inward supply of works contract services used for the construction of immovable property This is not applicable to the construction of plant and machinery. Also, Where inward supplies  used for further supplying of a works contract service, ITC is available.

4. G-GOODS LOST

NO ITC of Goods lost, stolen, destroyed, written off . Moreover No ITC for Goods disposed off by way of gift or free samples.

5. P-PERSONAL EXP. Or OTHER PURPOSE

NO ITC of goods or services or both used for personal consumption. Moreover, when goods or services or both are used partly for Business purpose and also other purpose then ITC should be proportionately disallowed for other purpose.

6. E-EXEMPTED SUPPLY

NO ITC Where the tax paid on goods or services or both are used by the registered person for making exempt supplies. Moreover, when goods or services or both are used partly for effecting taxable supply and partly for exempted supplies, ITC should be proportionately disallowed for Exempted supplies.

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