Blocked ITC Under GST Section 17(5): Practical List and Exceptions

Common categories include certain motor vehicles, food and beverages, club membership, employee vacation benefits, works contract and construction, personal consumption, lost or stolen goods, gifts and free samples.

For the connected rule or filing step, see GST Input Tax Credit Eligibility and Blocked-Credit Checker.

Legal or Computational Framework

Governing rule

Each blocked category contains exceptions. Motor-vehicle credit can be allowed for further supply, passenger transport or training; food or health credit can be available for outward supply of the same category or legal employer obligation; works-contract credit can be available for further works-contract service.

Correct workflow

Classify each inward supply; identify the blocked clause; test statutory exception and business or exempt allocation; verify invoice and GSTR-2B; document eligibility before claim.

Step-by-step method

1. Classify each inward supply.
2. identify the blocked clause.
3. test statutory exception and business or exempt allocation.
4. verify invoice and GSTR-2B.
5. document eligibility before claim.
6. Reconcile the conclusion with official statements and supporting documents.

Worked example

A company buys a passenger car for directors: credit is generally blocked. A driving school buys the same class of car for driving training: the statutory exception may permit credit.

The example is an audit trail, not a substitute for the user's facts. Change one input—residence, payment date, tax year, asset, return form, GST status, employer category or supporting document—and the result can change.

Edge cases

• Capitalisation does not cure blocked credit: record the factual and legal conclusion in the working paper.
• Plant and machinery has a specific construction definition: record the factual and legal conclusion in the working paper.
• Employee welfare mandated by law needs evidence: record the factual and legal conclusion in the working paper.
• Free samples remain blocked despite marketing purpose: record the factual and legal conclusion in the working paper.
• Insurance and repair for blocked vehicles follow connected rules: record the factual and legal conclusion in the working paper.

What Generic Pages Miss

Practical Documentation Checklist

• Purchase register
• GSTR-2B
• Invoice and receipt evidence
• Vendor ledger/payment ageing
• Blocked-credit register
• Claim/reversal/reclaim tracker

See the broader GST & Indirect Tax knowledge hub for related rules and calculators on this topic.

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