Section 17 of GST Act 2017 – Apportionment of credit and blocked credits. Check out details for GST Section 17 as per CGST Act 2017. Complete Analysis of GST Section 17, Section 17 of GST provide details for Apportionment of credit and blocked credits. Explanation of Goods and Service Tax all Sections. Check Section Wise Analysis of GST Act 2017, Chapter Wise Analysis of GST All Sections. in this article you may find complete details regarding Section 17 of CGST Act 2017 – Apportionment of credit and blocked credits, gst all section and definitionsNow Check more details from below…..

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Section 17 of GST – Apportionment of credit and blocked credits

(1)Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business.

(2)Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act, and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies.

(3)The value of exempt supply under sub-section (2) shall be such as may be prescribed, and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.

(4) A banking company or a financial institution including a non-banking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances shall have the option to either comply with the provisions of sub-section (2), or avail of, every month, an amount equal to fifty per cent of the eligible input tax credit on inputs, capital goods and input services in that month and the rest shall lapse.

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Provided that the option once exercised shall not be withdrawn during the remaining part of the financial year.

Provided further that the restriction of fifty per cent. shall not apply to the tax paid on supplies made by one registered person to another registered person having the same Permanent Account Number

(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following namely:

(a) motor vehicles and other conveyances except when they are used––

  • (i) for making the following taxable supplies, namely:—
    • (A) further supply of such vehicles or conveyances ; or
    • (B) transportation of passengers; or
    • (C) imparting training on driving such motor vehicles;
  • (ii) for transportation of goods;

(b) the following supply of goods or services or both—

  • (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an 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 an element of a taxable composite or mixed supply;
  • (ii) membership of a club, health and fitness centre;
  • (iii) rent-a-cab, life insurance and health insurance except where–
    • (A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or
    • (B) 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; and
  • (iv) travel benefits extended to employees on vacation such as leave or home travel concession;

(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;

(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant and machinery) on his own account, including when such goods or services or both are used in the course or furtherance of business;

Explanation.– For the purpose of clause (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property.

(e) goods or services or both on which tax has been paid under section 10;

(f) goods or services or both received by a non-resident taxable person except on goods imported by him;

(g) goods or services or both used for personal consumption;

(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and

(i) any tax paid in accordance with the provisions of sections 74, 129 and 130.

(6) The Government may prescribe the manner in which the credit referred to in sub-sections (1) and (2) may be attributed.

Explanation.– For the purposes of this Chapter and Chapter VI, the expression ‘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

  • (i) land, building or any other civil structures;
  • (ii) telecommunication towers; and
  • (iii) pipelines laid outside the factory premises.

Related Provisions of the Statute

Section or RuleDescription
Section 2(47)Definition of ‘Exempt Supply’
Section 2(119)Definition of ‘Works Contract’
Section 16Eligibility and conditions for taking input tax credit
Section 18Availability of credit in special circumstances
Section 74Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts.
Section 129Detention, seizure and release of goods and conveyances in transit
Section 130Confiscation of goods or conveyances and levy of penalty
Schedule IIActivities to be treated as supply of goods or supply of services
Rule 45Conditions and restrictions in respect of inputs and capital goods sent to the job worker
Section 16 of IGST ActZero Rated Supply

Introduction

The input tax credit eligibility is based on the fact as to whether the goods or services or both are used for taxable supplies or exempt supplies. Where the goods or service or both are used for both taxable and exempted supplies, only proportionate credit is allowed to a registered person, Further, this section provides for a list of supplies that are ineligible for input tax credit.

Frequently Asked Questions

Where goods or services or both received, is used for both taxable and non-taxable supplies, what would be the input tax credit entitlement for the registered person?

The input tax credit of goods or service or both used in respect of taxable supplies can only be availed by the registered person.

Whether the taxable supply would include supplies on which tax is payable by recipient on reverse charge basis?

No.

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Latest Comments

  1. material purchased Rs. 116 including GST Rs. 16 , we have taken input of gst Rs. 16 , now material
    destroyed in our factory due to expiry date , my question is wether we have to reverse GST Rs. 16
    which we have taken .

    Reply
  2. material purchased Rs. 116 including GST Rs. 16 , we have taken input of gst Rs. 16 , now material
    destroyed in our factory due to expiry date , my question is wether we have to reverse GST Rs. 16
    which we have taken .

    Reply
  3. Company Name Truck, Two Wheeler & Car Repair& Service Bill GST Credit ?
    As above Vehicle Insurance GST Credit ?
    Pls send GST Rule with answer Urngent

    Reply
  4. Company Name Truck, Two Wheeler & Car Repair& Service Bill GST Credit ?
    As above Vehicle Insurance GST Credit ?
    Pls send GST Rule with answer Urngent

    Reply
  5. Hi, can a tour operator avail input tax credit (GST rate on tour operator service is 5% No ITC), for example he arrange a accommodation in hotel for a client and charged 5% GST from Client, and hotel billed him @ 18% GST, can he avail this ITC.

    Reply
  6. Hi, can a tour operator avail input tax credit (GST rate on tour operator service is 5% No ITC), for example he arrange a accommodation in hotel for a client and charged 5% GST from Client, and hotel billed him @ 18% GST, can he avail this ITC.

    Reply
  7. I have a construction business and for making my sales we offer certain schemes to our customers like we have taken spa membership at raddsion and for every booking we offer one spa service. can i avail gst paid on this membership as ITC?

    Reply
  8. I have a construction business and for making my sales we offer certain schemes to our customers like we have taken spa membership at raddsion and for every booking we offer one spa service. can i avail gst paid on this membership as ITC?

    Reply
  9. Hi
    Are we allowed to take ITC Refund for items like oils and lubricants, bearing fan belts, wires , electrical contractors and other consumables of machinery which is used for the manufacturing of the final product.
    Please do let me know.

    Reply
  10. Hi
    Are we allowed to take ITC Refund for items like oils and lubricants, bearing fan belts, wires , electrical contractors and other consumables of machinery which is used for the manufacturing of the final product.
    Please do let me know.

    Reply
    • Yes, you are right but if you are onto 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; then ITC will be available

      Reply
    • Yes, you are right but if you are onto 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; then ITC will be available

      Reply
  11. GST ACT SEC 17(5)(C) says…. input tax credit shall not be available in respect of works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service.
    We are govt registered contractor, usually undertake construction work of roads,bridges,buildings, etc in process of construction we purchase material like Cement,Asphalt,Sreel etc..
    Are we allowed credit of GST on purchased material?

    Reply
    • Section 17(5)(c) bars availing of credit when works contract services are supplied for construction of immovable property. There is however an exception that when works contract service is an input service for further supply of works contract service, this bar is not applicable. For example, earth work, masonry work, water proofing work, wood work etc. are independent works contract services in construction of a building and are supplied for construction of immovable property, yet credit would be admissible, since these are used for larger works contract (i.e. building) and therefore, the matter would fall inside the exception stated above and therefore, all these contractors would be eligible for credit on inputs/services. In your case, if the supply of works contract service is for (say construction of road) use in the larger part of a works contract (say a housing complex) then you are eligible for credit. Otherwise not.

      Reply
  12. GST ACT SEC 17(5)(C) says…. input tax credit shall not be available in respect of works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service.
    We are govt registered contractor, usually undertake construction work of roads,bridges,buildings, etc in process of construction we purchase material like Cement,Asphalt,Sreel etc..
    Are we allowed credit of GST on purchased material?

    Reply
    • Section 17(5)(c) bars availing of credit when works contract services are supplied for construction of immovable property. There is however an exception that when works contract service is an input service for further supply of works contract service, this bar is not applicable. For example, earth work, masonry work, water proofing work, wood work etc. are independent works contract services in construction of a building and are supplied for construction of immovable property, yet credit would be admissible, since these are used for larger works contract (i.e. building) and therefore, the matter would fall inside the exception stated above and therefore, all these contractors would be eligible for credit on inputs/services. In your case, if the supply of works contract service is for (say construction of road) use in the larger part of a works contract (say a housing complex) then you are eligible for credit. Otherwise not.

      Reply

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