Can I claim ITC on a motor car purchase?

ITC on motor vehicles (≤13 passengers) is blocked under Section 17(5)(a) unless used for: supply of motor vehicles (car dealer), transportation of passengers (taxi/cab service), imparting driving training, or transportation of goods. For personal or general business use, ITC is not available.

Is ITC available on food and beverages?

ITC on food and beverages, outdoor catering, and club membership is blocked under Section 17(5)(b). Exception: if your business is specifically in that category (e.g., a restaurant or catering company) and the expense relates to your taxable outward supply.

Can I claim ITC on health insurance premium paid for employees?

ITC on health insurance for employees is blocked under Section 17(5)(b)(iii) unless it is obligatory under any law (e.g., Workmen Compensation Act) or is a contractual obligation in the employment contract. Optional/voluntary group health insurance is blocked.

Is ITC available on construction of office building?

ITC on works contract services and goods used in construction of an immovable property (other than plant and machinery) is blocked under Section 17(5)(c) and (d). This applies even if the building is used for business purposes. Exception: if you are in the business of supplying works contract services or construction.

ITC Eligibility Checker — Can I Claim Input Tax Credit? 2026

42 items 22 eligible 20 blocked

Motor car / SUV (≤13 passengers)

Blocked unless used for passenger transport business, car dealer resale, or driving school

§ 17(5)(a) CGST Act

Blocked

Commercial vehicle / truck / lorry

Allowed — used for transport of goods

§ General rule CGST Act

Eligible

Two-wheeler (motorcycle, scooter)

Blocked for general business use

§ 17(5)(a) CGST Act

Blocked

Ambulance

Allowed — used for healthcare services

§ 17(5)(a) exception CGST Act

Eligible

Taxi / cab (registered for passenger service)

Allowed — vehicle used for transportation of passengers as business

§ 17(5)(a) exception CGST Act

Eligible

Motor vehicle insurance (for blocked vehicle)

Blocked — insurance of blocked vehicles follows same rule

§ 17(5)(ab) CGST Act

Blocked

Motor vehicle repair & maintenance (blocked vehicle)

Blocked — related services for blocked vehicles are also blocked

§ 17(5)(ab) CGST Act

Blocked

Food and beverages (office canteen, lunch)

Blocked unless your business is supply of food/beverages

§ 17(5)(b)(i) CGST Act

Blocked

Outdoor catering (office party, event)

Blocked unless mandatorily provided under a statute

§ 17(5)(b)(i) CGST Act

Blocked

Restaurant expenses (client entertainment)

Blocked — entertainment expenses not eligible

§ 17(5)(b)(i) CGST Act

Blocked

Hotel accommodation (business travel)

Allowed — for business purpose travel. Keep invoice in company name.

§ General rule CGST Act

Eligible

Hotel accommodation (personal / holiday)

Blocked — personal use

§ General rule CGST Act

Blocked

Health club / gym membership

Blocked — club, health and fitness centre membership

§ 17(5)(b)(ii) CGST Act

Blocked

Beauty treatment / spa

Blocked unless your business is beauty services

§ 17(5)(b)(ii) CGST Act

Blocked

Group health insurance (voluntary)

Blocked unless obligatory under statute or contract

§ 17(5)(b)(iii) CGST Act

Blocked

Group health insurance (obligatory by law/contract)

Allowed — where mandated by Employees State Insurance Act or employment contract

§ 17(5)(b)(iii) exception CGST Act

Eligible

Works contract for own building construction

Blocked — immovable property construction ITC not available

§ 17(5)(c) CGST Act

Blocked

Civil works for office renovation / extension

Blocked — immovable property

§ 17(5)(d) CGST Act

Blocked

Purchase of plant and machinery

Allowed — plant and machinery specifically excluded from the immovable property block

§ 17(5)(d) exception CGST Act

Eligible

Works contract for plant/machinery installation

Allowed — plant and machinery services are eligible

§ 17(5)(c) exception CGST Act

Eligible

Travel benefits for employee (LTC / holiday)

Blocked — personal benefit, not for business purpose

§ 17(5)(b)(iv) CGST Act

Blocked

Employee relocation expenses

Allowed — legitimate business expenditure

§ General rule CGST Act

Eligible

Employee uniform / work clothing

Allowed — used in course of employment/business

§ General rule CGST Act

Eligible

Life insurance premium (employees)

Blocked unless obligatory under statute

§ 17(5)(b)(iii) CGST Act

Blocked

Club membership (golf, business club)

Blocked — explicitly mentioned in Section 17(5)

§ 17(5)(b)(ii) CGST Act

Blocked

Professional association membership (CA, ICAI)

Allowed — business purpose

§ General rule CGST Act

Eligible

Software subscription (SaaS, tools)

Allowed — used for business operations

§ General rule CGST Act

Eligible

LinkedIn / professional networking subscription

Allowed — business development purpose

§ General rule CGST Act

Eligible

CSR (Corporate Social Responsibility) expenses

Blocked — not in course of or for furtherance of business

§ Section 17(1) CGST Act

Blocked

Gifts to employees (above ₹50,000/year)

Blocked — gift above threshold is blocked

§ 17(5)(h) CGST Act

Blocked

Gifts to employees (≤ ₹50,000/year)

Allowed — gifts within the ₹50,000 annual limit per employee

§ 17(5)(h) proviso CGST Act

Eligible

Promotional goods given free to customers

Blocked — goods disposed of as gifts

§ 17(5)(h) CGST Act

Blocked

Raw materials for manufacturing

Allowed — directly used in taxable supply

§ General rule CGST Act

Eligible

Capital goods (machinery, computers)

Allowed — used in business, subject to Rule 43 apportionment if also personal use

§ General rule CGST Act

Eligible

Office stationery and supplies

Allowed — used in business operations

§ General rule CGST Act

Eligible

Goods used for personal consumption

Blocked — must be for business purpose

§ Section 16(1) CGST Act

Blocked

Professional services (CA, legal, consultant)

Allowed — used for business

§ General rule CGST Act

Eligible

Freight and logistics services

Allowed (if GST-registered transporter or reverse charge paid)

§ General rule CGST Act

Eligible

Advertising and marketing services

Allowed — business promotion

§ General rule CGST Act

Eligible

IT and software development services

Allowed — business use

§ General rule CGST Act

Eligible

Security guard services

Allowed — business premises security

§ General rule CGST Act

Eligible

Cleaning and housekeeping services

Allowed — used for business premises

§ General rule CGST Act

Eligible

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Important Notes on ITC Eligibility

Rule of thumb: ITC is available on any goods or services used "in the course or furtherance of business" UNLESS specifically blocked under Section 17(5). The Section 17(5) list is exhaustive — if the expense is not on that list, ITC should be available subject to the general conditions under Section 16.

Three conditions must ALL be met: (1) You must have a valid tax invoice from a registered supplier. (2) The goods/services must have been received. (3) The supplier must have paid the tax to the government and filed their return.

ITC eligibility can be complex — facts of each case matter. This tool provides general guidance based on Section 17(5) of the CGST Act as amended up to Finance Act 2024. Consult a CA for case-specific advice.

Related Tools

Section 17(5) — Blocked Credits (Complete List)

Item	ITC Available?	Exception (When ITC IS Available)
Motor vehicles (≤13 seats)	Blocked	Used for: transportation of persons for business (taxi), further supply of vehicles, driving school, courier/ambulance
Motor vehicles (>13 seats)	Available	No restriction — bus, larger transport
Aircraft and vessels	Blocked	Used for: further supply, transportation of goods, training
Food, beverages, outdoor catering	Blocked	Used for: making taxable supply of same category (restaurant)
Beauty treatment, health services	Blocked	Used for: making taxable supply of same category
Membership of club/health/fitness	Blocked	No exception
Rent-a-cab services	Blocked	Government mandates cab service for employees
Life insurance & health insurance	Blocked	Government mandates insurance for employees under law
Travel benefits to employees	Blocked	No exception
Works contract for immovable property	Blocked	Input service in further works contract supply
Construction of immovable property	Blocked	Plant and machinery — ITC available
Goods lost, destroyed, stolen	Blocked	No exception
Goods used for personal consumption	Blocked	No exception
Free samples and gifts	Blocked	No exception
Tax paid under Section 74 (fraud)	Blocked	No exception

ITC Conditions — All 4 Must Be Met (Section 16)

Mandatory conditions for any ITC claim

Section 16(2)(a): Tax invoice or debit note must be in possession
Section 16(2)(aa): Invoice must appear in GSTR-2B of the recipient
Section 16(2)(b): Goods received or services received
Section 16(2)(c): Tax must actually have been paid to the government by the supplier
Section 16(2)(d): GST return (GSTR-3B) must have been filed

Common ITC mistakes that attract DRC-01

Claiming ITC on invoices not in GSTR-2B — most common notice trigger
ITC on blocked items under Section 17(5) — particularly motor vehicles and food
ITC from suppliers with cancelled GSTIN — invalid from cancellation date
ITC claimed before goods/services received — timing violation
ITC on invoices older than permitted time limit (Section 16(4))
ITC not reversed proportionately for exempt supplies under Rule 42

Check Supplier's Filing Status Before Claiming ITC

ITC is only available when the supplier has filed GSTR-1. Check your supplier's filing compliance before claiming ITC in GSTR-3B.

Check Filing Status ITC Reconciliation Tool

Frequently Asked Questions

What happens if I claim ITC on a blocked item?

Claiming ITC on blocked items (Section 17(5)) is treated as excess ITC utilisation. It must be reversed in GSTR-3B. If the reversal is not made voluntarily, the department may issue a demand with interest at 24% per annum from the date of utilisation, plus penalty.

Can I claim ITC on business travel?

Yes — air/rail/road tickets for business travel are eligible for ITC (input services under general rule). Hotel accommodation for business travel is also eligible. However, if the travel has personal components, only the proportionate business portion is eligible.

Is ITC available on computers and software purchased for office use?

Yes, both hardware (computers, servers — capital goods) and software (SaaS subscriptions, software licenses — input services) attract ITC at the applicable GST rate, and the credit is fully eligible for business use.

Can a composition dealer claim ITC?

No. Composition dealers cannot claim Input Tax Credit on any purchases. This is one of the key restrictions of the composition scheme. They also cannot collect GST from customers.