GST ITC NOT AVAILABLE ON FOLLOWING GOODS, EVEN IF ITS SHOWING IN GSTR 2A.

Cases Where Input Tax Credit under GST Cannot Be Availed

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 of 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 input tax credit, only if certain cases are met with the transactions.

Invoice matching of both the parties will be the key issue for checking and granting the input tax credit to the dealer while in certain cases, input tax credit may not be available for some rules and regulation purpose.

For a taxpayer, it is essential to determine whether the tax paid on the inward supplies is eligible as Input Tax Credit (ITC) or shall fall within the ambit of ineligible ITC. Section 17(5) of CGST Act 2017 provides for cases wherein a taxpayer would not be entitled to claim ITC unless it falls within the exceptions as provided.

Some of the Goods and Service which are not Eligible for Input Tax Credit

Specific cases are mentioned under the GST law where no input tax credit shall be available for claims to the taxpayer. We are going to discuss the ineligibility of input tax credit in the article with exceptions.

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	Foods, Outdoor Catering, Beauty Treatment, Health Services Cosmetic, Plastic Surgery	“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	Insurance, repairs and maintenance for motor vehicles and conveyance not allowed	“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 of a Health Centre	–
7	Membership of a Fitness Centre;	–
7	Rent-a-cab, Life Insurance, Health Insurance	“The Government states the services which are mandatory for an employer to provide to its employees under any law for the time being in force; or” “Such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same Category of goods or services or both or as part of a taxable composite or mixed supply.”
8	Travel benefits extended to employees on vacation such as leave	–
9	Travel benefits on home travel concession (LTA)	–
11	Works contract services when supplied for construction of an immovable property	“Except where it is an input service for extended supply of works contract service and plant and machinery”
12	Goods or services or both received by a taxable person for construction of an immovable property	“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 is exempted from GST upto 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.

 

Disclaimer: The content of this document is for general information purpose only & as per available data as on date of Article. Anshul k Jain & Co. shall not accept any liability for any decision taken based on the advice. You should carefully study the situation before taking any decision.