THE CENTRAL GOODS AND SERVICES TAX ACT, 2017
INPUT TAX CREDIT
Section 17: Apportionment of credit and blocked credits (Relevant Rules 42 to 43 , Rule 38) (Relevant Updates)
*(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.
2[Explanation.-For the purposes of this sub-section, the expression ‘‘value of exempt supply’’ shall not include the value of activities or transactions specified in Schedule III, 3[except,—
(i) the value of activities or transactions specified in paragraph 5 of the said Schedule; and
(ii) the value of such activities or transactions as may be prescribed in respect of clause(a) of paragraph 8 of the said Schedule
. ]
[helldodold[except those specified in paragraph 5 of the said Schedule]helldod].]
(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:
Provided that the option once exercised shall not be withdrawn during the remaining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:-
*1[(a)
motor vehicles
for transportation of persons having approved seating capacity of
not more than thirteen persons (including the driver), except when they are used
for making the following taxable supplies, namely:-
(A) further supply of such motor
vehicles; or
(B) transportation of passengers; or
(C) imparting training on driving
such motor vehicles;
(aa) vessels and aircraft except when they are used––
(i) for
making the following taxable supplies, namely:-
(A) further supply of such vessels or aircraft; or
(B) transportation of passengers; or
(C) imparting training on navigating such vessels; or
(D) imparting training on flying such aircraft;
(ii) for
transportation of goods;
*(ab) services of general insurance,
servicing, repair and maintenance in so far as they relate to motor vehicles,
vessels or aircraft referred to in clause (a) or clause (aa):
Provided that the input tax credit in respect of such services shall be
available-
(i) where the motor vehicles, vessels or aircraft referred to in clause (a) or
clause (aa) are used for the purposes specified therein;
(ii) where received by a taxable person
engaged-
(I) in the
manufacture
of such motor vehicles, vessels or aircraft; or
(II) in the supply of general insurance services in respect of such motor
vehicles, vessels or aircraft insured by him;
*(b) the following supply of goods or
services
or both-
(i) food and beverages, outdoor catering, beauty treatment, health services,
cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles,
vessels or
aircraft referred to in clause (a) or clause (aa) except when used
for the purposes specified therein, life insurance and health insurance:
Provided that the input
tax credit in respect of such goods or services or both
shall be available where an inward supply
of such goods or services or both 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; and
(iii) travel
benefits extended to employees on vacation such as leave or home travel
concession:
*Provided that the input tax credit in respect of such goods or services or both
shall be available, where it is obligatory for an employer to provide the same
to its employees under any law for the time being in force.”.]
[helldod
old[(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, flying, navigating such vehicles or
conveyances;
(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 or 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 purposes of clauses (c) and (d), the expression “construction” includes
re-construction, renovation, additions or alterations or repairs, to the extent
of capitalisation, 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;
4[*(fa) goods or services or both received by a
taxable person
, which are used or intended to be used for activities relating to his obligations under corporate social responsibility referred to in section 135 of the Companies Act, 2013;]
(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
5[section
74 in respect of any period up to Financial Year 2023-24] [helldodold[section 74,
section 129 and
section 130]helldod].
(6) The
Government
may prescribe the manner in which the credit referred to in
subsections (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.
1.Substituted Vide: Section 9 of CGST Amendment Act 2018 vide Notification No. 02/2019 - Central Tax (w.e.f. 01.02.2019)
2. Inserted Vide: Section 9 of CGST Amendment Act 2018 vide Notification No. 02/2019 - Central Tax (w.e.f. 01.02.2019)