TaxTMI 
TaxTMI 
TaxTMI 
In-Depth Analysis of Input Tax Credit under the GST Act: Section 17 – Apportionment of Credit and Blocked Credits
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....n-Depth Analysis of Input Tax Credit under the GST Act: Section 17 – Apportionment of Credit and Blocked Credits<br>By: - Rajagopal K<br>Goods and Services Tax - GST<br>Dated:- 9-7-2025<br>Section 17 - Apportionment of Credit and Blocked Credits Sub-section (1): Business and Non-Business Use When goods or services are used partly for business and partly for other purposes, ITC shall be restric....
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....ted to the portion attributable to business use only. Sub-section (2): Taxable vs Exempt Supplies When goods or services are used: * Partly for taxable supplies (including zero-rated supplies), and * Partly for exempt supplies under CGST or IGST Acts, Then, ITC shall be restricted to the portion used for taxable and zero-rated supplies. Sub-section (3): Value of Exempt Supplies The value ....
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....of exempt supplies for apportionment under sub-section (2) shall be as prescribed, and shall include: * Supplies on which the recipient pays tax under reverse charge, * Transactions in securities, * Sale of land, and * Sale of building, subject to clause (b) of para 5 of Schedule II. Explanation to Sub-section (3): The value of exempt supply shall not include activities listed in Schedul....
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....e III, except: * (i) Activities under para 5 of Schedule III, and * (ii) Activities as may be prescribed under clause (a) of para 8 of Schedule III. Sub-section (4): Option for Banks and NBFCs A banking company, financial institution, or NBFC providing services like deposits, loans, or advances may: * Either comply with sub-section (2), or * Claim 50% of the eligible ITC each month on in....
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....puts, capital goods, and input services. The rest shall lapse. Provisos: * Once this option is exercised, it cannot be withdrawn during the financial year. * The 50% restriction does not apply to inter-branch supplies between registered persons having the same PAN. Sub-section (5): Blocked Credits Notwithstanding Section 16(1) and 18(1), no ITC is allowed on the following: Clause (a): Moto....
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....r Vehicles Motor vehicles (seating = 13 including driver), except when used for: * Further supply of such vehicles, * Transportation of passengers, * Training on driving such vehicles. Clause (aa): Vessels and Aircraft Vessels and aircraft, except when used for: (i) Taxable supplies such as: (A) Further supply of vessels or aircraft, (B) Passenger transport, (C) Navigation or flying t....
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....raining. (ii) Transportation of goods. Clause (ab): Insurance & Repairs for Vehicles/Vessels/Aircraft General insurance, servicing, repair & maintenance of the vehicles/vessels/aircraft in (a) and (aa), except when: (i) Used as per (a)/(aa), (ii) Received by a person: (I) Manufacturing such vehicles/vessels/aircraft, &....
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....nbsp; (II) Supplying insurance services for such vehicles/vessels/aircraft. Clause (b): Specified Goods/Services The following goods/services, except when used for outward supply of same category or as part of a taxable composite/mixed supply: (i) Food & beverages, outdoor catering, beauty treatment, health services, cosmetic/plastic surgery....
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...., leasing/hiring of motor vehicles, vessels, aircraft (as per a/aa), life/health insurance. (ii) Membership of clubs, health & fitness centres. (iii) Travel benefits to employees on vacation (e.g., LTC, home travel). Exception: Allowed if employer is legally obligated to provide under any law. Clause (c): Works Contract Services ITC on works contract services for construction of immovable pro....
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....perty (excluding plant/machinery), except where its an input for further works contract service. Clause (d): Construction on Own Account ITC on goods/services used for construction of immovable property on own account, even if used for business. Explanation: "Construction" includes: * Reconstruction, * Renovation, * Additions/alterations, * Repairs (if capitalized). Clause (e): Composi....
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....tion Scheme ITC on goods/services taxed under Section 10 (Composition Scheme). Clause (f): Non-Resident Taxable Person ITC on goods/services received by non-resident taxable person, except imports. Clause (fa): CSR Activities ITC on goods/services used for Corporate Social Responsibility (CSR) obligations under Section 135 of the Companies Act, 2013. Clause (g): Personal Consumption ITC on ....
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....goods/services used for personal consumption. Clause (h): Lost, Stolen, Gifted, or Sampled Goods ITC on goods that are: * Lost, * Stolen, * Destroyed, * Written off, * Given as gifts or free samples. Clause (i): Tax Paid under Section 74 ITC of tax paid under Section 74 for any period up to FY 2023-24. Sub-section (6): Attribution Rules The Government may prescribe the manner in wh....
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....ich credit under sub-sections (1) and (2) is to be attributed to business/exempt use. Explanation - Definition of Plant and Machinery "Plant and Machinery" includes: * Apparatus, equipment, and machinery fixed to earth via foundation or structural support, * Used for outward supply of goods/services. Excludes: * Land and buildings or other civil structures, * Telecom towers, * Pipelin....
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....es laid outside factory premises. Thank You for Reading Thank you for taking the time to read this article. I appreciate your attention and interest in the topic. I hope the insights shared here prove valuable in your professional endeavours. Your feedback or perspective is always welcome-please feel free to connect or continue the conversation.<br> Scholarly articles for knowledge sharing by au....
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....thors, experts, professionals ....