Section 17(5) of CGST Act - List of ineligible items

Section 17(5) of cgst act deals with particular provision refers to list of the blocked input tax credit which are ineligible for ITC or blocked credits. Taxpayer while paying the output tax cannot claim ITC when they purchase from the list. When purchase is made by paying output tax. Then ITC can’t be claimed by the taxpayer.

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What is the section 17(5) of cgst act ?

Section 17(5) of cgst act is defined as blocked credit. It is GST paid on the the list of the purchase but this is a Input Tax Credit which business cannot claim. Input tax credit is reverse along with the interest where tax are not paid by the supplier.

section 17(5) of cgst act blocked credit list

Under the GST specified goods or services or both which are disallowed from input tax by the registered person is known as blocked credit.

Hiring or leasing or renting of aircraft or vehicles or vessels	Aircraft or motor vehicle or vessel is used for the purpose then input tax credit will be available as mentioned below - Motor vehicle is further supplied. On such motor vehicles driving training is provided. Transportation of Passengers.
Motor vehicles used for the transportation of the person where seating is not more than 13 person (including driver).	If motor vehicle is used for any of the taxable supplies then input tax credit is not allowed as mentioned below - Motor vehicle is further supplied. On such motor vehicles driving training is provided. Transportation of Passengers.
Aircraft and Vessels	Aircraft and vessel is used for any taxable supplies then input tax credit is allowed like - Passengers’ Transportation Vessel and Aircraft is supplied further. Goods’ Transportation Training on the flying or navigating vessel or aircraft.
Servicing or general insurance services or maintenance or repair of vessel or motor vehicles or aircraft	Taxable person receives services then input tax credit is available. Vessel or aircraft or motor vehicle manufacturer. Provision of general insurance services pertaining to such vehicles, ships, and aeroplanes. Additionally, when motor vehicles, watercraft, or aircraft are utilised for the aforementioned objectives, the input tax credit for such services will also be accessible.
Construction of an immovable property with work contract service is supplied	When such works contract service is an input service for the subsequent provision of works contract service, the input tax credit will be available.
Receiving products, services, or both for the 'building' of an immovable object (other than machinery and plant). It should be noted that such credit is not available even if it is used to advance business. It's important to note that the phrase "construction" encompasses rehabilitation, additions, modifications, and repairs of immovable property.
Under section 10 both goods and services tax is paid such as composition scheme
Non-Resident receives goods or services or both	A non-resident taxable person imports goods.
For personal consumption goods and services are used
Destroyed or goods lost or stolen or written off or given through free sample or gift	.
According to the provision of the following sections, tax is paid Section 129 seizure, detention and release of the conveyance or goods Section 130 conveyance or confiscation of goods. Short paid or not paid tax by way of willful misstatement or reason of fraud or facts are suppression.

Penalties under GST Section 17(5)

Taxpayers should be aware of claiming an ITC for an item that is on the list of prohibited or ineligible items under Section 17(5) of cgst act could result in fines and interest. If ITC is improperly claimed or used, a penalty is due. Then penalty of 10% or 100% is availed. 18% P.A on ITC wrongly availed and utilized.

Conclusion

section 17(5) of cgst act list of the purchase on that ITC can not be claimed under the GST. GST is paid on the purchase but input tax credit can not be claimed. Till 30 November of the next year is the time limit to avail ITC u/s 16(4).

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Frequently Asked Questions

Define blocked or ineligible credit under Section 17(5) of CGST Act ?

It specifies a list of transactions for which GST is paid but which firms are not eligible to claim as Input Tax Credits (ITC).

Define Section 17(5) of CGST Act?

GST was introduced to stop cascading taxes and guarantee a steady flow of input tax credits across the whole supply chain.

Who under Section 17(5) of CGST Act is ineligible ITC?

Motor vehicles and other conveyances (aside from when they are used to make taxable supplies), food and beverages, outdoor catering, beauty treatments, health services, rent-a-cab, life insurance, health insurance, goods, and other items are included on the list of ineligible or blocked ITC under GST Section 17(5).

What does assignment of credit and blocked credits in Section 17(5) of CGST Act mean?

The amount of the credit is limited to the input tax that is attributable to the registered taxable person's business purposes when the goods and/or services are utilised in part for the registered taxable person's business and in part for other reasons.