1. Motor vehicles & conveyances

 

ITC 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) Further, ITC is not available on vessels and aircraft.

 

2.  Supply of other vehicles or conveyances, vessels or aircrafts.

 

If you are in the business of supplying cars then ITC will be available.

For example, a car dealer purchases a car for Rs.50 lakh plus 14 lakh GST (ignoring cess calculations). The same car was later sold for 70 lakhs along with Rs.19.60 lakh GST. Since he is a dealer, he can claim ITC of 14 lakhs and pay only Rs.5.60 lakh (19.60 – 14.00).

 

3. Transportation of passengers

If you are providing transportation of passengers then ITC will be allowed on the vehicle purchased.

 

4. Transportation of goods

ITC will be allowed on motor vehicles (and other conveyances) used to transport goods from one place to another. However, this is concerning other transporters and not goods transport agencies.

 

5. Food, beverages, club memberships and others

ITC is not for the supply of following goods or services or both:

 

1. Food and beverages
2. Outdoor catering
3. Beauty treatment
4. Health services
5. Cosmetic and plastic surgery

 

6. Services of general insurance, servicing, repair and maintenance

No ITC is allowed on services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in (1).

 

Exceptions to ITC on insurance, repair or maintenance

 

Same as expections mentioned for motor vehicles/vessels/aircrafts where received by a taxable person engaged—

 

1. In the manufacture of such motor vehicles, vessels or aircraft; or
2. In the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him.

 

7. Rent-a-cab, life insurance, health insurance

However, the following are exceptions, i.e., ITC is available fora.

 

1. Any services which are made obligatory for an employer to provide its employee by the Indian Government under any current law in force

 

2. If the category is same for the inward supply and outward supply or it is a part of the mixed or composite supply

 

3. leasing, renting or hiring of motor vehicles, vessels or aircraft with exceptions same as those mentioned for (1).

 

8. Travel

ITC is not available in the case of travel, benefits extended to employees on vacation such as leave or home travel concession.

For example,

ABC Ltd. offers a travel package to its employees for personal holidays. ITC on GST paid by ABC Ltd. for the holiday package will not be allowed.

ITC will be allowed for travel for business purposes.

 

9. Works contract

 

 ITC shall not be available for any work contract services. ITC for the construction of an immovable property cannot be availed, except where the input service is used for further work contract services.

 

10.  Constructing an immovable property on own account

No ITC is available for goods/services for construction of an immovable property on his own account. Even if such goods/services are used in the course or furtherance of business, ITC will not be available.

 

11. Composition Scheme

No ITC would be available to the person who has made the payment of tax under composition scheme in GST law.

 

12. No ITC for Non-residents

ITC cannot be availed on goods/services received by a non-resident taxable person. ITC is only available on any goods imported by him.

 

13. No ITC for personal use

No ITC will be available for the goods/ services used for personal purpose and not for business purposes.

 

14.  No ITC on restaurants

1. Restaurants will charge only 5% GST but cannot enjoy any ITC on the inputs.

 

2. However, restaurants as part of hotels with room tariffs exceeding Rs.7,500 still continue pay 18%GST (previously 28% GST) and ITC can be taken.

 

3. Subway charges 5% GST and cannot claim any ITC.

 

4. The Park Hotel or The Park Plaza by the Pool restaurant in Kolkata is a part of the  hotel and so it will charge 18% GST while enjoying ITC.

 

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