What are blocked credits under Section 17(5)?

Section 17(5) lists supplies on which input tax credit cannot be claimed despite GST being paid, including motor vehicles for personal use, food and beverages, club memberships, employee travel benefits, and works contracts for immovable property.

Can I claim ITC on a motor vehicle?

Generally no for vehicles seating up to 13 persons. Exceptions: when the vehicle is used for further supply of vehicles, transport of passengers, or driving instruction. Goods-transport vehicles are fully eligible.

Is ITC on food and beverages always blocked?

It is blocked unless the food or beverages are used to make an outward taxable supply of the same category, or where the employer is legally obliged to provide them to employees.

What is the time limit to claim eligible ITC?

ITC for a financial year must be claimed by 30 November of the following year or the date of filing the annual return, whichever is earlier.

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Blocked input tax credit under Section 17(5)

You pay GST on many business expenses, but the law blocks credit on some of them. Here is the full Section 17(5) list of ineligible credits, with the exceptions that let you claim.

Updated 2026-05-30 · A reference guide from Ledgester

Key facts

Section 17(5) of the CGST Act lists supplies on which input tax credit is not available, even though GST was charged.
Motor vehicles for personal use, food and beverages, club memberships and employee perks are common blocked credits.
Several blocks have exceptions. For example, ITC on motor vehicles is allowed when they are used for further supply, passenger transport or driving instruction.
Credit must still meet all the Section 16 conditions before the Section 17(5) blocks are even tested.

What are blocked credits?

Input Tax Credit (ITC) lets a business offset the GST it pays on purchases against the GST it collects on sales. But Section 17(5) of the CGST Act carves out a specific list of purchases where credit is blocked: you pay the GST but cannot claim it back, so it becomes a real cost.

The blocked-credit list

Motor vehicles for transport of persons with seating capacity up to 13 (including the driver): blocked, with exceptions below.
Vessels and aircraft: blocked unless used for the eligible purposes below.
Food and beverages, outdoor catering, health services, cosmetic and plastic surgery: blocked, unless used to make an outward taxable supply of the same category, or where an employer is legally obliged to provide them.
Club, health and fitness centre memberships.
Rent-a-cab, life insurance and health insurance: blocked, except where the government makes them obligatory for an employer.
Travel benefits extended to employees on vacation (leave or home travel concession).
Works contract services for construction of immovable property: blocked, except where it is an input service for a further works-contract supply.
Goods or services for construction of immovable property on a person's own account (even if used for business).
Goods or services used for personal consumption.
Goods lost, stolen, destroyed, written off, or given as gifts or free samples.
Tax paid under composition, or under demand provisions for fraud (Sections 74, 129 and 130).

When can you claim ITC on a motor vehicle?

The motor-vehicle block has important exceptions. Credit is allowed when the vehicle (seating up to 13) is used for:

Further supply of such vehicles (e.g. a car dealer);
Transport of passengers (e.g. a taxi or cab operator); or
Driving instruction (a driving school).

Separately, motor vehicles used for the transport of goods are not blocked at all, so credit is fully available.

First, the Section 16 conditions

Before Section 17(5) is even considered, the credit must satisfy the five conditions of Section 16: you hold a valid tax invoice, the supplier has paid the tax, you have received the goods or services, the relevant return is filed, and the claim is made within the time limit (30 November of the following financial year, or the annual return, whichever is earlier).

Frequently asked questions

What are blocked credits under Section 17(5)?: Section 17(5) lists supplies on which input tax credit cannot be claimed despite GST being paid, including motor vehicles for personal use, food and beverages, club memberships, employee travel benefits, and works contracts for immovable property.
Can I claim ITC on a motor vehicle?: Generally no for vehicles seating up to 13 persons. Exceptions: when the vehicle is used for further supply of vehicles, transport of passengers, or driving instruction. Goods-transport vehicles are fully eligible.
Is ITC on food and beverages always blocked?: It is blocked unless the food or beverages are used to make an outward taxable supply of the same category, or where the employer is legally obliged to provide them to employees.
What is the time limit to claim eligible ITC?: ITC for a financial year must be claimed by 30 November of the following year or the date of filing the annual return, whichever is earlier.

Try the ITC eligibility checker → Open Ledgester →

This guide is general information, not professional tax advice, and GST rules change through CBIC notifications. Verify the current position for your situation or consult a qualified professional before acting.