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Blocked Credit Under Section 17(5): Examples From Daily Business
धारा 17(5) में ब्लॉक्ड ITC: कार, खाना, गिफ्ट, बिल्डिंग: रोज़ के उदाहरण
Which GST input tax credit is blocked under section 17(5), with everyday examples: car, fuel, food, gifts, building work, staff benefits. Table of allowed vs blocked.
A purchase can have a proper GST bill and still give no input tax credit. Section 17(5) lists these blocked items. Most wrong-ITC demands come from a handful of everyday expenses, so here they are with examples.
Allowed or blocked: common expenses
| Expense | ITC | Why |
|---|---|---|
| Car or SUV for the owner or staff (up to 13 seats) | Blocked | Motor vehicles for people are blocked unless you deal in vehicles, run taxis / passenger transport or a driving school |
| Repair, servicing and insurance of that car | Blocked | Follows the vehicle |
| Truck, tempo or goods carrier used in business | Allowed | Vehicles for transporting goods are outside the block |
| Diesel or petrol | Not available | Fuel is outside GST; there is no GST on it to claim |
| Staff tea, snacks, lunch, party, outdoor catering | Blocked | Food and beverages are blocked, except where a law requires you to provide it, or it is your own line of business (a caterer buying catering) |
| Diwali gifts to customers or staff | Blocked | Goods given as gifts or free samples are blocked; reverse ITC if you had taken it on stock |
| Health or life insurance for staff | Blocked | Unless a law makes it compulsory for the employer |
| Club or gym membership, holiday travel for staff | Blocked | Specifically listed |
| Building your shop, office or godown (civil work, cement, steel) | Blocked | Construction of immovable property on your own account is blocked, even if capitalised. The Finance Act 2025 amendment (back to 1 July 2017) confirms this for buildings |
| Plant and machinery, and its foundation | Allowed | Plant and machinery is outside the block; the land and the building are not |
| Repairs of the building charged to profit and loss | Allowed | Only work that is capitalised as the building is blocked |
| Goods lost, stolen, destroyed or written off | Reverse | ITC on such stock must be reversed |
| Items for the owner's personal or home use | Blocked | Personal consumption |
| Tax paid on a demand with fraud, or on detention / seizure | Blocked | Specifically listed |
How to keep it right in BUSY
Separate account heads
Keep staff welfare, vehicle (car) running, gifts, building and personal heads separate from normal expenses, so blocked credit is easy to find.
Mark ITC as ineligible
In the purchase or expense voucher set ITC Eligibility to the ineligible / none option for these heads. Normal purchases stay as Input Goods/Services.
Check every month
Before GSTR-3B, look at Display > GST Reports > GST Summary and make sure blocked credit is not in eligible ITC. Report it as ineligible in Table 4 of GSTR-3B.
Menu names as given in BUSY's own help on busy.in; they can differ slightly by BUSY version, plan and configuration. Take a backup before changing settings.
Full method, with sections 16 conditions and reversals: how to choose eligible ITC with BUSY.
General information, not legal advice. GST and income-tax rules change often: check the latest notifications, circulars and GSTN advisories, and consult your CA or tax practitioner for your own case.
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Updated 2026-10-27 · Bharat Busy Care, Authorised BUSY Platinum Partner, Sri Ganganagar
FAQ
Can I claim ITC on a car used for business?
No, if it is a motor vehicle for up to 13 persons, unless you deal in vehicles or run passenger transport or a driving school. ITC on goods vehicles is allowed.
Is ITC available on food for staff?
Generally no. It is allowed only where a law requires the employer to provide it, or where you supply the same service yourself.
Can I take ITC on Diwali gifts?
No. Goods given as gifts or free samples are blocked; if you had taken ITC on that stock, reverse it.
Is ITC allowed on construction of my shop or office?
No. Goods and services for building immovable property on your own account are blocked. Plant and machinery is allowed.
Is GST on building repairs blocked?
Repairs charged to profit and loss are allowed. Only work capitalised as part of the building is blocked.
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- Year-End Closing in BUSY: Stock, Outstanding, Depreciation and New Year
- MSME 45-Day Payment Rule (Section 43B(h)): How Buyers and Sellers Should Plan
- Party Balance Confirmation Before Audit: How to Do It With BUSY
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