1 Replies
Vinod Babu
(24191 Points)
Replied 18 September 2018
Section 17(5)
Notwithstanding anything that sub-section (1) of section 16 and subsection (1) of section 18 contains, ITC will not be available in respect of the following,
namely:
motor vehicles and other conveyances apart from when they are used–
for transporting the goods; or
for making the following taxable supplies, namely:
further supplying such vehicles or conveyances; or
transporting the passengers; or
imparting training on driving, navigating, flying such vehicles or conveyances;
the following supply of goods or services or both—
food and beverages, beauty treatment, cosmetic and plastic surgery, health services, outdoor catering, except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
membership of a club, health and fitness centre;
rent-a-cab, life insurance and health insurance except where––
the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or
such inward supply of goods or services or both of particular categories is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply; and
travel benefits extended to employees on vacation such as leave or
home travel concession;
works contract services when supplied for construction of immovable property (other than plant and machinery) except where it is an input service for the further supply of works contract service;
goods or services or both received by a taxable person for construction of immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.
Explanation
For clauses third and fourth, the expression “construction” includes reconstruction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;
goods or services or both on which tax has been paid under section 10;
goods or services or both received by a non-resident taxable person except on goods imported by him;
goods or services or both used for personal consumption;
goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and
any tax paid by the provisions of sections 74, 129 and 130
Section 74 provides for the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised because of fraud or any wilful misstatement or suppression of fact.
Section 129 deals with the detention, seizure and release of goods and conveyances in transit and the tax paid in this procedure
Section 130 deals with the confiscation of goods or conveyances and levy of penalty
Supplies on which ITC is not applicable
Motor cycles and other conveyances
ITC is available on motor cycles and other conveyances only when they are used for making the following taxable supplies
Further supply of such vehicles or conveyances
Transportation of passengers
Imparting training on driving, flying, navigating such vehicles or conveyances
So, apart from the exceptions, ITC cannot be availed on purchase of motor cycles and other conveyance. ITC can be availed when these are used for transportation of goods for either self or some other recipient.
Specific goods and / or services or both
ITC will not be available to a registered person for the following receipt of goods or availment of services or both:
Food and beverages
Outdoor catering services
Beauty treatment
Health services
Cosmetic and plastic surgery services
ITC will be available on the above when an inward supply of goods and / or services or both of the abovementioned categories is used for making an outward taxable supply of goods and/or services or both or as an element of taxable composite or mixed supply
Membership of a club, health and fitness centre
ITC cannot be availed on tax paid for membership of club, health and fitness centre under any circumstances. This restriction is absolute, and there is no exception.
Rent cab, health insurance, life insurance: ITC shall not be available to registered persons on renting a cab, life and health insurance supplies received by it. This restriction is not absolute. ITC will be available where the government notifies the services which are obligatory for an employer to provide to his employees for the time being in force. Also, where such an inward supply of goods and services or both of a particular category is used by a registered person to make an outward taxable supply of the same category, or when it is used as a part of composite mixed supply, ITC is allowed. Also, The ITC on the supply of above services is allowed when it is paid on account of travel benefits extended to employees on vacation such as leave travel concession
Works contract services when supplied for construction of immovable property: ITC not available to a registered person for the tax paid on the inward supply of works contract services used for the construction of immovable property. This is not applicable to the construction of plant and machinery. Where it is input used for further supplying of a works contract service, ITC is available.
Goods and / or services or both on which tax has been paid u/s 10
Goods and / or services or both received by a non-resident taxable person except on goods imported by him
Goods or services or both used for personal consumption
Goods lost, stolen, destroyed, written off or disposed off by way of gift or free samples.
ITC shall not be available to a registered person on any tax paid by the provisions of section 74, 129 and 130.
Notwithstanding anything that sub-section (1) of section 16 and subsection (1) of section 18 contains, ITC will not be available in respect of the following,
namely:
motor vehicles and other conveyances apart from when they are used–
for transporting the goods; or
for making the following taxable supplies, namely:
further supplying such vehicles or conveyances; or
transporting the passengers; or
imparting training on driving, navigating, flying such vehicles or conveyances;
the following supply of goods or services or both—
food and beverages, beauty treatment, cosmetic and plastic surgery, health services, outdoor catering, except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
membership of a club, health and fitness centre;
rent-a-cab, life insurance and health insurance except where––
the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or
such inward supply of goods or services or both of particular categories is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply; and
travel benefits extended to employees on vacation such as leave or
home travel concession;
works contract services when supplied for construction of immovable property (other than plant and machinery) except where it is an input service for the further supply of works contract service;
goods or services or both received by a taxable person for construction of immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.
Explanation
For clauses third and fourth, the expression “construction” includes reconstruction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;
goods or services or both on which tax has been paid under section 10;
goods or services or both received by a non-resident taxable person except on goods imported by him;
goods or services or both used for personal consumption;
goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and
any tax paid by the provisions of sections 74, 129 and 130
Section 74 provides for the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised because of fraud or any wilful misstatement or suppression of fact.
Section 129 deals with the detention, seizure and release of goods and conveyances in transit and the tax paid in this procedure
Section 130 deals with the confiscation of goods or conveyances and levy of penalty
Supplies on which ITC is not applicable
Motor cycles and other conveyances
ITC is available on motor cycles and other conveyances only when they are used for making the following taxable supplies
Further supply of such vehicles or conveyances
Transportation of passengers
Imparting training on driving, flying, navigating such vehicles or conveyances
So, apart from the exceptions, ITC cannot be availed on purchase of motor cycles and other conveyance. ITC can be availed when these are used for transportation of goods for either self or some other recipient.
Specific goods and / or services or both
ITC will not be available to a registered person for the following receipt of goods or availment of services or both:
Food and beverages
Outdoor catering services
Beauty treatment
Health services
Cosmetic and plastic surgery services
ITC will be available on the above when an inward supply of goods and / or services or both of the abovementioned categories is used for making an outward taxable supply of goods and/or services or both or as an element of taxable composite or mixed supply
Membership of a club, health and fitness centre
ITC cannot be availed on tax paid for membership of club, health and fitness centre under any circumstances. This restriction is absolute, and there is no exception.
Rent cab, health insurance, life insurance: ITC shall not be available to registered persons on renting a cab, life and health insurance supplies received by it. This restriction is not absolute. ITC will be available where the government notifies the services which are obligatory for an employer to provide to his employees for the time being in force. Also, where such an inward supply of goods and services or both of a particular category is used by a registered person to make an outward taxable supply of the same category, or when it is used as a part of composite mixed supply, ITC is allowed. Also, The ITC on the supply of above services is allowed when it is paid on account of travel benefits extended to employees on vacation such as leave travel concession
Works contract services when supplied for construction of immovable property: ITC not available to a registered person for the tax paid on the inward supply of works contract services used for the construction of immovable property. This is not applicable to the construction of plant and machinery. Where it is input used for further supplying of a works contract service, ITC is available.
Goods and / or services or both on which tax has been paid u/s 10
Goods and / or services or both received by a non-resident taxable person except on goods imported by him
Goods or services or both used for personal consumption
Goods lost, stolen, destroyed, written off or disposed off by way of gift or free samples.
ITC shall not be available to a registered person on any tax paid by the provisions of section 74, 129 and 130.
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