Blocked Credit under GST: Section 17(5) List
Definition
Blocked credit is GST paid on purchases that cannot be claimed as input tax credit even when used in business, because section 17(5) of the CGST Act specifically disallows it — such as food, most passenger cars and construction of buildings.
| Term | Blocked credit under GST (Section 17(5)) |
|---|---|
| In Hindi | अवरुद्ध क्रेडिट (धारा 17(5)) |
| Area | GST & tax |
| Search phrase | blocked credit under GST |
| Try it | ITC reversal |
अवरुद्ध क्रेडिट (धारा 17(5)) — हिंदी में अर्थ
अवरुद्ध क्रेडिट वह GST है जो व्यवसाय में उपयोग होने पर भी इनपुट टैक्स क्रेडिट के रूप में नहीं लिया जा सकता, क्योंकि CGST अधिनियम की धारा 17(5) इसे मना करती है — जैसे भोजन, अधिकतर यात्री कारें और भवन निर्माण।
The main blocked items
Motor vehicles for carrying persons with seating up to 13 (including the driver), and their repair, insurance and servicing — unless used to supply vehicles, carry passengers or train drivers. Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, life and health insurance — unless legally required to be provided to employees or used for an onward supply of the same kind. Membership of clubs and health and fitness centres. Travel benefits to employees on vacation, such as leave travel concession.
Works contract services and goods or services for constructing an immovable property on your own account (other than plant and machinery), even when capitalised. Goods lost, stolen, destroyed, written off, or given as gifts or free samples. Purchases by a composition taxpayer, and tax paid on demands for fraud or suppression.
Practical points for a factory
Plant and machinery is allowed — foundations and structural supports for machines count as plant and machinery, but the factory shed and boundary wall do not. Canteen food for workers is blocked unless the Factories Act or another law obliges you to provide it. Keep blocked purchases tagged in your purchase entry so they never reach GSTR-3B Table 4(A).
Example
A unit buys a 7-seater car for the director for ₹12,00,000 plus GST; that GST cannot be claimed. A forklift for the stores, bought at ₹8,00,000 + 18% GST, is plant used in business, so the ₹1,44,000 ITC is allowed.
Related tools and guides
Frequently asked questions
What is blocked credit under GST?
ITC that section 17(5) of the CGST Act disallows even when the purchase is for business.
Is ITC on a company car allowed?
Not for motor vehicles carrying up to 13 persons, unless the business supplies vehicles, carries passengers or trains drivers.
Can ITC be claimed on factory building construction?
No, construction of immovable property on own account is blocked — except plant and machinery.
Is ITC on free samples allowed?
No. ITC on goods given as free samples or gifts is blocked and must be reversed if already claimed.
Related terms
- Bill of supplyA bill of supply is the GST document issued instead of a tax invoice when no tax can be charged — by a composition taxpayer, or by a registered person supplying exempt goods or services. It shows no GST amount.
- Composition scheme (GST)The composition scheme is an optional, simpler GST scheme for small taxpayers: they pay tax at a low fixed percentage of turnover, file quarterly, but cannot charge GST on their invoices or claim input tax credit.
- GST registration limitA business must register under GST once its aggregate turnover in a financial year crosses ₹40 lakh if it supplies only goods, or ₹20 lakh if it supplies services — with lower limits in some special-category states — or earlier if it falls in a compulsory registration category.
- GSTR-1 vs GSTR-3BGSTR-1 is the return of outward supplies — invoice-wise details of sales. GSTR-3B is the summary return in which tax is actually paid and input tax credit claimed. Both are filed by regular GST taxpayers.
- ITC reversal under GSTITC reversal means paying back input tax credit already claimed, or not claiming it, when the conditions for credit are not met — for example the supplier is not paid within 180 days, or inputs are used for exempt supplies.
- Nil-rated, exempt, zero-rated and non-GST supplyNil-rated supplies carry a 0% GST rate; exempt supplies are wholly exempted from GST; zero-rated supplies are exports and supplies to SEZs, where ITC is still allowed; non-GST supplies are items outside GST altogether, such as petrol and alcohol for human consumption.