GlossaryGSTWhat is Blocked Credit (Section 17(5))?
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What is Blocked Credit (Section 17(5))?

Blocked credit refers to input tax credit that Section 17(5) of the CGST Act specifically disallows, even when the purchase is used for business.

Bare Law Reference: Section 17(5), CGST Act 2017.

Detailed Explanation

How it works

Common blocked items include motor vehicles for passenger transport (with exceptions), food and beverages, club membership, construction of immovable property, and goods given as gifts or free samples.

Frequently asked questions

What are examples of blocked credit?

Motor vehicles (up to 13 seats), food and beverages, club membership, construction of immovable property, and free samples/gifts.

Are there exceptions to blocked credit?

Yes, such as vehicles for further supply or passenger transport, and obligatory employee benefits.

This content is for general guidance only and does not constitute professional advice. Tax law changes frequently — verify the current position and consult a qualified Chartered Accountant before acting. Last reviewed: June 2026.

Key Takeaways

  • Section 17(5) disallows ITC on specified supplies.
  • Motor vehicles, food, construction and gifts are blocked.
  • Exceptions exist for specific business uses.