In this article, you can quickly check out the list of goods and services that are not eligible for an input tax credit as per the GST Act, 2017.
Introduction of ITC
Input tax credit is considered very significant for every business unit which is always in the need to invest in the business in the manner of capital. The need for capital is required each and every time a business gets ready for its next project. This time in GST, a business unit will be eligible for the input tax credit, only if certain cases are met with the transactions.
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Invoice matching of both parties will be the key issue for checking and granting the input tax credit to the dealer while in certain cases, the input tax credit may not be available for some rules and regulation purposes.
Some of the Goods and Services Which are Not Eligible for ITC
Read Also: Input Tax Credit Guide Under GST: Calculation with Proper Examples
| S.No. | Items | Exceptions |
|---|---|---|
| 1 | Motor Vehicles | Except in cases: “Extended supply of such vehicles or conveyances;” “Transportation of passengers” |
| 2 | Other Conveyances | “Providing training on driving, navigating such vehicles” “Conveyances for transportation of goods” “Motor vehicles for transportation of persons having an approved capacity of more than thirteen persons including driver when they are used for business purposes” “Buses for pick and drop of employees (if approved capacity is more than 13 persons including driver) – part of above.” |
| 3 | Insurance, repairs and maintenance for motor vehicles and conveyance are not allowed | “Except where an inward supply of goods or services or both of a particular category is consumed by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply” “ITC is available in respect of food and beverages or health services where the provision of such goods or services is obligatory for an employer to provide to employees under any law for time being in force.” |
| 4 | Membership in a Health Centre | “Only allowed under this head if ITC on vehicles are allowed;” “If the ITC on any type of vehicle is not allowed, then the cost of insurance, repairs and maintenance for such vehicles is also not allowed.” |
| 5 | Membership of a Club, | – |
| 6 | Membership in a Fitness Centre; | – |
| 7 | Works contract services when supplied for the construction of an immovable property | – |
| 7 | Rent-a-cab, Life Insurance, Health Insurance | “Gifts to employees are exempted from GST up to a value of Rs 50,000 per employee – Schedule I of CGST Act, 2017 (Refer Sec 7)” |
| 8 | Travel benefits extended to employees on vacation such as leave | – |
| 9 | Travel benefits on home travel concession (LTA) | – |
| 11 | “Except where it is an input service for the extended supply of works contract service and plant and machinery” | Goods or services or both received by a taxable person for the construction of an immovable property |
| 12 | “Gifts to employees is exempted from GST up to a value of Rs 50,000 per employee – Schedule I of CGST Act, 2017 (Refer Sec 7)” | “Except goods or services received on his own account including when such goods or services or both are used in the course or furtherance of business and plant and machinery” |
| 13 | Goods or services or both on which tax has been paid under section 10; | ie. Under section 10 composition scheme |
| 14 | Goods or services or both received by a non-resident taxable person | “Except on goods imported by him” |
| 15 | Goods or services or both used for personal consumption | – |
| 16 | Goods lost | – |
| 17 | Goods written off | – |
| 18 | Goods destroyed | – |
| 19 | Goods stolen | – |
| 20 | Goods disposed of by way of gift or free samples | “Gifts to employees are exempted from GST up to a value of Rs 50,000 per employee – Schedule I of CGST Act, 2017 (Refer Sec 7)” |
| 21 | Any tax paid in accordance with the provisions of sections 74, 129 and 130. | I.e. In Fraud, Misstatement, etc. |
Dear Sir,
We are organising Marketing Meet in 4 Star Hotel in Mumbai with the following budget
1: Staying Charges in 4 Star Hotels: About 25 Rooms: Room Rent Rs. 6000/- + GST (1,50,000/- + GST)
2: Hall Charges for Round Table: Rs. 1,50,000/- + GST
3: Decoration and Presentation Arragement: Rs. 1,50,000/- + GST
4: Food and beverages Charges: Rs: 1,50,000/- + GST
Out of 4 cases declared above where we can avail Input Tax Credit while filing the GST return.
Thanks and Regards
Besides food and beverages charges, you can claim ITC on all other services availed.
Except point 4 you can claim ITC.
We are manufacturer of chemicals. We have constructed new rooms where we unload semi finished chemical for natural crystallization of our chemical and chemical change its state from liquid to solid when it is kept in such rooms. So can it be treated as plant and machinary and can ITC be claimed on construction bills of such rooms built in factory premises.
Secondly, we have bought car before gst law was implemented for our marketing person to meet our business clients and suppliers, So can ITC be availed on this car repair bill, and new tyre bill. Can it be consider as furtherance of business as the marketing person is using it for business travel
Thanks
No, Land and Building cannot be treated as plant and machinery. “Plant and machinery” means apparatus, equipment and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes –
1. Land, building or any other civil structures
2. Telecommunication towers and
3. Pipelines laid outside the factory premises.
Since definition specifically excludes land and building, therefore it cannot be considered as plant and machinery.
ITC on car repairs and new tyres can be claimed since these are not covered under exclusions provided by the law.
We are a manufacturer of chemicals. We have constructed new rooms where we unload semi-finished chemical for natural crystallization of our chemical and chemical change its state from liquid to solid when it is kept in such rooms. So can it be treated as plant and machinery and can ITC be claimed on construction bills of such rooms built in factory premises?
Secondly, we have bought a car before GST law was implemented for our marketing person to meet our business clients and suppliers, So can ITC be availed on this car repair bill, and new tyre bill. Can it be considered as a furtherance of business as the marketing person is using it for business travel
Hi Sir,
Am doing Milk, Ice cream business & GST registered, for supply, I have purchased commercial vehicle a month before, ITC availed for the same … Due to some financial problem, I have decided to sale that vehicle @ cost price
Shall I raise an invoice to the purchaser with GST, Is he is eligible for ITC
Pls clarify
Yes, the invoice has to be raised for selling capital goods with GST. The purchaser can claim ITC on Purchase of Motor Vehicles only if he engaged in any of the following business:
1.Supply of other vehicles or conveyances, vessels or aircraft.
2.Transportation of passengers
3. Imparting training on driving, flying, navigating such vehicle or conveyances or vessels or aircraft, respectively.
4.Transportation of goods
Dear Sir,
We have retail stores in various malls. Malls give us the empty store and we carry out interior works for the beauty of the stores including false ceiling, AC connection, electrical work etc. We can not alter the immovable property given to us. Can we claim input tax on these lease interior works (called civil works only) for setting up the retail store?
Please help, Thanks
No, you cannot as these work not relatable to the furtherance of business directly or indirectly
But these are essential exp to bring the business into existence then why ITC is not allowed?