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. No | Nature of Input Tax credit not allowed | Exceptions |
| 1 | Input 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. |
| 2 | Input Tax credit on Food, Beverages, Membership fees in Clubs | Input 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. |
| 3 | Input tax credit on General Insurance, servicing , repairs & maintenance of motor vehicles | |
| 4 | Input tax credit paid on Membership fees paid to Club, health & fitness centres. | |
| 5 | Input tax credit on Cab Rental , Life Insurance and Health Insurance | Any 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). |
| 6 | Input tax credit on Works Contract | Where the input service is used for further work contract services. |
| 7 | Input 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. |
| 8 | Composition Scheme If any person opts for payment of tax under Composition Scheme, Input Tax credit will not be available to him | |
| 9 | No Input tax credit if the goods/services are used for personal purposes | |
| 10 | Input Tax credit on Free Samples & goods destroyed by fire , etc., The ITC in respect of these goods should be reversed. | |
| 11 | No 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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