Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:—
1. Motor vehicles and other conveyances :-
Input tax credit is not available for motor vehicles used to transport persons, having a seating capacity of less than or equal to 13 persons (including the driver), and further input tax credit is not available on vessels and aircraft
Except in cases
- Supply of such vehicles or conveyances; or
- Example– If you are in the business of supplying Cars/Motor Cycle then Input tax credit will be available.
- Transportation of passengers; or
- Example- If you are providing transportation of passengers by Bus and other then ITC will be allowed on the vehicle purchased.
- Imparting training on driving, flying, navigating such vehicles or conveyances or vessels or aircrafts etc;
- Example– A driving school purchases a car to give training to students. Then input tax credit will be allowed on the Car purchased
- Transportation of goods;
- Example- If you are providing transportation of Goods by Truck and other then Input tax credit will be allowed on the vehicle purchased (Note- other transporters and not goods transport agencies (GTA) ).
(2) The following supply of goods or services in GST
(A) Food and Beverages and Beauty Treatment Etc:-
Input tax credit is not for the supply of goods or services or both in GST
Food & Beverages,
beauty parlour treatment,
cosmetic & plastic surgery
except where an inward supply of goods or services and both of a above particular category is used by a GST registered person for making an outward taxable supply of the same category of goods and services or both or as an element of a taxable composite or mixed supply;
Examples- Sohan Enterprises arranges a party for office staff. Sohan Enterprises will not be able to claim Input tax Credit on the food and beverages served
(B) Membership of a club, health and fitness, gyms centre:-
(C) Rent-A-cab, life insurance and health insurance except where:-
Input tax credit is not available for rent-a-cab, health insurance and life insurance.
(A) The CBDT notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or
(B) such inward supply of goods or services and both of a particular category is used by a GST registered person for making an outward taxable supply of the same category of goods or services or as part of a taxable composite or mixed supply; and
(D) Travel :-
ITC is not available in the case of Travel benefits extended to employees or staff on vacation such as leave or home travel concession;
Example- XYZ Ltd offers a travel package to its office staff for personal holiday. Input tax credit on GST paid by XYZ Ltd for the holiday package will not be allowed.
(3) Works contract:
ITC shall not be available for any Works contract services in GST, 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 in GST;
Example– A Contractors are constructing an immovable property. They cannot claim any ITC on the works any contract.
(4) Constructing an immovable property on own account:-
goods or services and 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 and both are used in the course or furtherance of business.
Example- Laxmi Enterprises constructs an office building for its head office. Input tax credit will not be available.
(5) Composition Scheme:-
No Input tax credit would be available (Goods or services and both on which tax has been paid under section 10; )
Goods and services and both received by a non-resident taxable person except on goods imported by him;
(7) No ITC for personal use:-
No Input Tax Credit will be available for the Goods and services or both used for personal purposed and not for business purposes.
(8) Free sample, gift, destroyed goods Etc.
No Input tax credit is available for Goods lost, Goods stolen, Goods destroyed, written off of by way of gift or free samples; and
(9) No ITC would be available If any tax paid in accordance with the provisions of sections 74, 129 and 130
If any tax paid in accordance with the provisions of sections 74, 129 and 130.
Example- Non or short tax payment, Excessive refund, Input tax credit uti
lised, Fraud cases, Seizure of goods, Misstatement Etc
10.No ITC on Restaurants
As per GST Notification No.46/2017-Central Tax (Rate), dated 14.11.2017, Restaurant operators will charge only 5% GST then not Input tax credit is available.
If Restaurant operators will charge only 18% GST then Input tax credit is available
GST Other Post
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