Hello friends greetings for the day, in the current article we will discuss about non availability of input tax credit under GST As per section 17 of CGST Act, there are certain conditions under which input tax credit is not available and we will discuss each and every scenario and exception thereto.

As per Section 17(5) of CGST Act 2017 “Input tax credit” shall not be available in respect of the following namely:-

1. Motor vehicles and other conveyance- Input tax credit on motor vehicles or other conveyances cannot be taken for the supply of goods or services, however there are certain exceptions in these cases input tax credit can be claimed

  • When they are used for further supply of such vehicles or conveyances or
  • Transportation of passengers or
  • Imparting training on driving, flying , navigating such vehicles or conveyances or
  • For transportation of Goods

2. food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery- However input tax credit is allowed if these are used 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.

3. Membership of a club, health and fitness center.

4. Rent-a-cab, life insurance and health insurance- Exception are where:-

  • The government notifies services which are obligatory for an employer to provide to its employees under any law for the time being in force or
  • such inward supply of goods or services or both is used for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply.

5. Travel benefit extended to employees on vacation such as leave or home travel concession.

6. works contract services when supplied for construction of an immovable property except:-

  • where it is an input service for further supply of works contract service;
  • used for plant and machinery

7. Goods or services or both received by a taxable person for construction of an immovable property on his own account including when such goods or services or both are used in the course or furtherance of business except:-

  • Used for Plant and machinery

8. Input tax credit is not available in any kind of supply of goods or services from the “composite dealer”.

9. Goods or services or both received by a non-resident taxable person except on goods imported by him.

10. Goods or services or both used for personal consumption

11. Input tax credit is not available in case of:-

  • Goods stolen
  • Goods lost
  • Goods destroyed
  • Goods written off
  • Goods disposed off
  • Goods given as gift
  • Goods given as sample

12. Any tax paid due to confiscation of goods or conveyances if due to following reason:-

  • supplies or receives any goods in contravention of Act or  rules with intent to evade payment of tax
  • does not account for any goods on which he is liable to pay tax; or
  • supplies any goods liable to tax without having applied for registration
  • contravenes any of the provisions of this Act or the rules with intent to evade payment of tax
  • uses any conveyance as a means of transport for carriage of goods in contravention of Act or rules

13. Any tax paid due to-detention or seizure (where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules liable to detection or seizure) and release of goods and conveyance in transit

14. Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilized by reason of fraud, or any willful-misstatement or suppression of facts to evade tax.

In case of any doubts in the current topic or provisions of Indirect taxation (GST and CUSTOMS) then you may contact us at abhutpurv@gmail.com

Author Bio

More Under Goods and Services Tax

One Comment

Leave a Comment

Your email address will not be published. Required fields are marked *