GST · Input tax credit
On which purchases is GST input tax credit blocked under section 17(5)?
Short answer
Credit is blocked on motor cars and other vehicles for up to 13 people (unless you deal in them, transport passengers or run a driving school), and on food, catering, beauty, health and club services, life and health insurance, and leave travel for employees. It is also blocked on construction of a building on your own account, except plant and machinery, and on goods lost, stolen, written off, or given as gifts or free samples. Personal use and CSR spending are blocked too.
The blocked list
| Purchase | Blocked unless |
|---|---|
| Motor vehicles for transporting people, seating up to 13 (including the driver); their insurance, repair and servicing | Used for further supply of vehicles, passenger transport or driving training; or the vehicle is for goods transport |
| Vessels and aircraft; their insurance and repair | Used for further supply, passenger transport, training, or goods transport |
| Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery | Used for an outward supply of the same kind; or the employer must provide it by law (for example, a canteen under the Factories Act) |
| Leasing, renting or hiring of the vehicles, vessels and aircraft above | Same exceptions as the vehicles |
| Life and health insurance | Same kind of outward supply, or obligatory by law for employees |
| Membership of a club, health or fitness centre | Never allowed |
| Travel benefits to employees on vacation (leave travel) | Never allowed |
| Works contract for construction of immovable property | It is plant and machinery, or used for a further works contract |
| Goods or services for construction of immovable property on your own account, even if capitalised | It is plant and machinery |
| Composition tax paid | Never allowed |
| Goods lost, stolen, destroyed, written off, or given as gifts or free samples | Never allowed |
| Goods or services for personal consumption | Never allowed |
| Spending on corporate social responsibility obligations | Never allowed |
| Tax paid on demands for fraud or suppression, and on detention or confiscation | Never allowed |
The construction point
In October 2024 the Supreme Court read "plant or machinery" in section 17(5)(d) widely. The Finance Act, 2025 then amended it to "plant and machinery", retrospectively from 1 July 2017, so a building, even one used to earn rent, is not "plant". Credit on materials and services for constructing a building remains blocked.
Practical points
- Credit is allowed on the goods-transport part of vehicle use, such as trucks.
- If you have taken a blocked credit, reverse it with interest in GSTR-3B; do not wait for a notice.
- Work out the interest on a reversal with our GST interest calculator.
Legal basis
- Section 17(5), Central Goods and Services Tax Act, 2017 (as amended by the Finance Act, 2025)
Official sources
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