List of cases where GST Input Tax Credit cannot be availed

We all know Input Tax Credit (ITC) is available on all Inward Supplies under GST. But there are certain cases where Input Tax Credit (ITC) under GST cannot be claimed. Let us explore those cases.

Sl. NoNature of Input Tax credit not allowedExceptions
1Input Tax Credit on Motor Vehicles , aircrafts & other Conveyances , if the seating capacity is less than or equal to 13 persons (including the driver)ITC will be available if the vehicle is purchased for Further supply of vehicles or other conveyancesTransportation of passengersProviding Training on Driving, flying , etc., of vehiclesTransportation of goods.
2Input Tax credit on Food, Beverages, Membership fees in ClubsInput tax credit is available if the category of both Input and output supplies are the same.   For example, if you are a dealer of food products, ITC is allowed.
3Input tax credit on General Insurance, servicing , repairs & maintenance of motor vehicles 
4Input tax credit paid on Membership fees paid to Club, health & fitness centres. 
5Input tax credit on Cab Rental , Life Insurance and Health InsuranceAny services which are made obligatory for an employer to provide its employee by the Indian Government under any current law in forceIf the category is same for the inward supply and outward supply or it is a part of the mixed or composite supplyleasing, renting or hiring of motor vehicles, vessels or aircraft with exceptions same as those mentioned for (1).
6Input tax credit on Works ContractWhere the input service is used for further work contract services.
7Input Tax credit on Materials and services used in Construction of an immovable property on own account, even if the same is used in the course of or furtherance of business.ITC will be available on inputs used for Plant & Machinery.  
8Composition Scheme   If any person opts for payment of tax under Composition Scheme, Input Tax credit will not be available to him 
9No Input tax credit if the goods/services are used for personal purposes 
10Input Tax credit on Free Samples & goods destroyed by fire , etc.,   The ITC in respect of these goods should be reversed. 
11No ITC on restaurants. Standalone restaurants will charge only 5% GST and they cannot claim ITC on the inputs.  Restaurants as part of hotels with room tariffs exceeding Rs. 7,500 still continue pay 18% GST and enjoy ITC.

Wrong Claim of Input tax credit will lead to :-

  • Reversal of Input tax Credit availed
  • Penalty equivalent to Input Tax credit wrongly availed
  • Interest @ 18%/25% as the case may be from the date of availment till date of reversal.

These Input tax credit even though if it appears in your GSTR 2A/2B, the same should be reversed since they are ineligible Input tax credits.

Please ensure you claim correct Input Tax credit.

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