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Ineligible Input Tax Credit (ITC) under GST

As per CGST Act, input tax credit for following goods and services are not available or is ineligible:

1. Motor Vehicles or Conveyances

ITC cannot be claimed on motor vehicles if they are used for self-consumption by companies or individuals.

However, ITC can be claimed on motor vehicles in the following conditions:

– When vehicles are used for providing training on driving, flying or navigating

– When vehicles are further supplied

– When vehicles are used for transporting goods or passengers

 2. Food, Beverages and Outdoor Catering

ITC on food and beverages, outdoor catering cannot be claimed as input unless they are used for making output supply of the same category of goods and/or services.

3. Beauty Treatment, Health Services & Cosmetic and Plastic Surgery

ITC on beauty treatment, health services, cosmetic and plastic surgery cannot be claimed as input unless they are used for making output supply of the same category of goods and/or services.

4. Membership Of Clubs and Health Insurance

ITC on membership of clubs and health & fitness centres, rent-a-cab services and life & health insurance taken for employees cannot be claimed as input except when the Government notifies it as services which are obligatory for an employer to provide to its employees under law.

5. Travel Benefits for Employees

Travel benefits extended to employees on vacation such as leave or home travel concession cannot be claimed as input tax credit.

6. Personal Consumption

ITC on Goods or services used for personal consumption is not eligible for input tax credit

7. Exempt Supplies

Tax payers who are making exempted sales/services can’t claim input tax credit on goods and/or services used as inputs.

8. Lost or Stolen or Damaged Goods

Input tax credit is not available for goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.

9. Construction of Immovable Property

Goods or services received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account or even when it’s used in the course or furtherance of business cannot be claimed as input tax credit. Under GST Act, construction includes re-construction, renovation, additions or alterations or repairs.

10. Composition Supply

Composition Tax payers are typically small tax payers who are exempted from collecting outward tax and can’t claim input tax credit .So, composition tax payers cannot avail ITC on goods and/or services used as inputs.