Question 1

What is Section 17(5) of the CGST Act?

Accepted Answer

Section 17(5) lists categories of goods and services on which ITC is blocked (ineligible) even if used for business. Key blocked categories include: motor vehicles (with exceptions), food and beverages, outdoor catering, club memberships, health and fitness services, and works contract services for immovable property.

Question 2

What are the exceptions to Section 17(5) motor vehicle block?

Accepted Answer

ITC on motor vehicles is allowed if used for: (1) further supply of vehicles (dealers), (2) transportation of passengers (taxi operators), (3) imparting driving training, or (4) transportation of goods. For all other businesses, ITC on cars and two-wheelers is blocked.

Question 3

What happens if I claim blocked ITC?

Accepted Answer

Claiming ITC on Section 17(5) blocked items is treated as wrongful availment of ITC. It attracts demand under Section 73/74, interest at 18% per annum, and penalty. The GST department specifically scrutinises these claims during audits.

Question 4

How does the tool identify blocked credits?

Accepted Answer

The tool analyses your purchase register or GSTR-2B and flags invoices from suppliers in blocked categories (restaurants, hotels, car dealers, gyms, etc.) based on HSN codes and supplier GSTIN classification.

ITC Section 17(5) Blocked Credit Checker

Use this tool inside Ledgr

Frequently Asked Questions

ITC Section 17(5) Blocked Credit Checker

Use this tool inside Ledgr

Frequently Asked Questions