Apportionment of Input Tax Credit (ITC) and Blocked Credits

1) ITC for goods or services used partly for the business purpose and partly for other purposes: 

Where the goods or services are used by the registered taxable person partly for the purpose of any business and partly for other purposes, the amount of input tax credit shall be restricted to an amount which is attributable for business purposes.

2) ITC for goods or services used partly for taxable supplies and partly for exempt supplies:

Where the goods or services are used by the registered taxable person partly for taxable supplies including zero-rated supplies and partly for exempt supplies, the amount of input tax credit shall be restricted to an amount which is attributable for taxable supplies including zero-rated supplies.

3) ITC for Banking company or a financial institution:

In case of  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 comply with the provisions of section 17(2) or  avail every month an amount equal to 50% of the eligible ITC on inputs, capital goods and input services in that month.

4) Blocked Credits Under ITC

a) Motor vehicles and other conveyances except when they are used for for making the following taxable supplies:

i) further supplies of such vehicles and conveyances

ii) transportation of passengers

iii) imparting training on driving, flying and navigating such vehicles and conveyances

iv) transportation of goods

b)  Supply of goods and services of food, beverages, catering services(outdoor), health services, cosmetic and plastic surgery unless where such inward supply of goods or services of a particular category is used by a for making an outward taxable supply of the same category of goods or services.

c) Membership of a health and fitness centre, club

d) Cab on rent, life and health insurance except where 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.

e) Travel benefits for the employees on vacation such as home travel concession or leave.

F) When supplied for construction of immovable property other than plant and machinery in case of works contract services except where it is an input service for further supply of works contract service

g) Goods or services for construction of an immovable property other than plant and machinery received by a taxable person on his own account whether or not in the course or furtherance of business

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