Blocked credits under Section 17(5): what you cannot claim

A plain-language list of common ITC blocks: motor vehicles (with exceptions), food and beverages, club memberships, works contracts for immovable property, personal use and more.

Even if Section 16 conditions are met, ITC is not available on items listed in Section 17(5). Common ones:

• Motor vehicles for transporting persons with seating capacity of up to 13 (including driver), except when used for further supply of such vehicles, transport of passengers, or imparting driving training. Related general insurance, servicing and repair are blocked on the same basis, and vessels and aircraft follow similar rules.
• Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing/renting/hiring of blocked vehicles, and life and health insurance. Exceptions: when the same category is used for an outward taxable supply of that category, or when provision is obligatory for employers under any law.
• Membership of a club, health or fitness centre, and travel benefits to employees on vacation (e.g. LTC).
• Works contract services for construction of immovable property (other than plant and machinery), except where the recipient is in the same line of business, and goods/services received for construction of immovable property on own account, to the extent capitalised.
• Tax paid under the composition scheme, and goods/services for personal consumption.
• Goods lost, stolen, destroyed, written off or disposed of as gift or free samples.
• Tax paid on account of demands involving fraud (Sections 74, 129, 130).

The exact wording and exceptions matter. Always read clause-wise in the Act.