Clause Blocked Credit When ITC is Remarks

of available and not

Section blocked
17(5)

Motor vehicles for When such motor Earlier ITC was prohibited for

transportation of vehicles are used for all motor vehicles and now
persons having  i) further supply of seating capacity criteria has
approved seating such vehicles or been inserted in new clause. 
capacity of not ii) transportation of Further specific prohibition for
(a), b(i)) more than 13 passengers or ITC on services of general
& (ab) persons (including iii) imparting training insurance, servicing, repair and
the driver) on driving of such maintenance of motor vehicles
including leasing, motor vehicles.  was not there in old clause and
renting or hiring ITC would further be in new clause it has specifically
thereof. admissible for leasing, been prohibited to avoid
Services of general renting or hiring of disputes in this regard.
insurance, motor vehicles when Although normally tax payers
servicing, repair such motor vehicles were not availing ITC on such
and maintenance of are used for above said services.
aforesaid motor purposes or where the
vehicles recipient is engaged in
the manufacture of
such motor vehicles or
in the supply of
general insurance
services in respect of
such motor vehicles
insured by him.

Vessels and Aircraft When such Vessels

including leasing, and Aircraft are used Specific prohibition for ITC on
(aa) , renting or hiring for                                  services of general insurance,
b(i)) & thereof.  i) further supply of servicing, repair and
(ab) Services of general such Vessels and maintenance of vessels and
insurance, Aircraft or aircraft was not there in old
servicing, repair ii) transportation of clause and in new clause it has
and maintenance of passengers or specifically been prohibited to
aforesaid vessels iii) imparting training avoid disputes in this regard.
and aircrafts. on navigating / flying Although normally tax payers
such vessels / aircraft. were not availing ITC on such
iv) transportation of services.
goods.
ITC would be
admissible for leasing,
renting or hiring of
vessels or aircraft
when when such
vessels or aircraft are
used for above said
 purposes or where the
recipient is engaged in
the manufacture of
such vessels or aircraft
or in the supply of
general insurance
services in respect of
such vessels or aircraft
insured by him.

 
ITC would be available  
Supply of food and when inward supply of  
beverages, outdoor goods or services or  
b(i)  
catering, beauty both of a particular
treatment, health category is used by a  
services, cosmetic registered person for  
and plastic surgery, making an outward
life insurance and taxable supply of the
health insurance same category of ITC would be admissible where
goods or services or it is obligatory for an employer
both or as an element to provide such supplies to its
of a taxable composite employees under any law for
or mixed supply; the time being in force.
 

b(ii) membership of a -
club, health and
fitness centre;

b(iii) travel benefits

extended to -
employees on
vacation such as
leave or home travel
concession;
 
 
Works contract The
(c) services when term “construction” includes
supplied for re-construction, renovation,
- additions or alterations or
construction of an
immovable repairs, to the extent of
property (other capitalisation, to the said
than plant and immovable property;
machinery) except Further the expression “plant
where it is an input and machinery” means
service for further apparatus, equipment, and
supply of works machinery fixed to earth by
contract service; foundation or structural
   support that are used for
making outward supply of
Goods or services or goods or services or both and
both received by a includes such foundation and
(d) structural supports but
taxable person for -
construction of an excludes— (i) land, building or
immovable any other civil structures; (ii)
property (other telecommunication towers;
than plant or and (iii) pipelines laid outside
machinery) on his the factory premises
own account  
including when
such goods or
services or both are
used in the course
or furtherance of
business.

(e) Goods or services or It may noted here that under

both on which tax - composition scheme the tax
has been paid under cannot be charged by supplier
section 10 i.e. from the recipient and
Composition accordingly question ITC
Scheme availment by recipient does not
arise.
Goods or services or
(f) both received by a - -
non-resident
taxable person
except on goods
imported by him;

(g) Goods or services or - ITC is admissible only in

both used for respect of supplies taken for
personal business purposes. Thus
consumption; supplies received for personal
purposes are blocked.

Goods lost, stolen, Such goods being not used for

(h) destroyed, written - providing taxable supplies , the
off or disposed of by ITC thereon is blocked u/s
way of gift or free 17(5).
samples;  

(i) Any tax paid in As in such cases tax was not

accordance with the - paid with intention to evade
provisions of tax the ITC thereon has been
sections 74 (Tax not prohibited in order to penalize
/ short paid due to such assessees.
fraud etc), 129
(Detention , seizure
and release of goods
and conveyance in
transit) and 130
(confiscation of
goods or
conveyance and
levy of penalty).