Input credit means that at the time of paying tax on output, you can reduce the tax you have already paid on inputs and pay the balance amount. ITC, being the backbone of GST and a major matter of concern for the registered persons, conditions for eligibility to ITC and eligible ITC have been prescribed which is more or less in line with pre-GST regime. These rules are also quite particular and stringent in its approach. Specific cases are mentioned under GST where no input tax credit shall be available to the applicant. These are mentioned below-

 

1. Motor vehicles & conveyances

 

Input tax credit (ITC) is not available for motor vehicles and conveyances even if they are used in the business. ITC for both motorcycle and truck will not be available to ABC Ltd.

 

2.  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

 

3. Rent-a-cab, life insurance and health insurance [u/s 17(5) (b) (iii)]

 

GST paid for rent-a-cab, Life insurance and health insurance can’t be taken as ITC.

 

Exception: Where the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force.

 

If you are using above good/services for making an outward taxable supply of same goods or services or both or as an element of a taxable composite or mixed supply.

 

4. Travel

 

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

 

5. Works contract services

 

Works contract services when supplied for construction of an immovable property are ineligible ITC.

 

Exception: Where work contract service is used as an input service for the further supply of works contract service.

 

6. Constructing an immovable property on own account

 

ITC of goods or services or both used for the construction of an immovable property on own account is not available. ITC will not be available even if such goods or services or both are used in the course or furtherance of business.

 

7. Composition scheme

 

No ITC would be available to the person who has made the payment of tax under composition scheme in GST law. ITC of GST paid to composite dealers will not be available to the recipient.

 

8. Input used by non-resident taxable person

 

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

 

1. Input used for personal consumption

 

No ITC of goods or services or both used for personal consumption. However, if goods are used for both personal and business purpose, proportionate ITC for business purpose will be eligible as ITC.

 

2. Goods lost, stolen, destroyed and others

 

No ITC for goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples. Tax credit already availed need to be reversed in case of subsequent loss, theft, destruction etc.

 

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