GST Sec 17

Chakraborty Kapoor & Co.
LLP
Cost & Management Accountants
Goods and Service Tax:

Apportionment of credit and blocked credits.
Section 17
CMA C.P. Kalra
CMA Arunava Chakraborty
CMA Md. Rehan
Cost & Management Accountants
Email: info@cmackc.com
Contact No. 011-26275907
Chakraborty Kapoor & Co. LLP ©

Apportionment of credit
and blocked credits.
Section 17
Restriction of ITC upto Business Supplies
Sec 17 (1)
Where the goods or services or both are
used by the registered person partly for the
purpose of any business and partly for other
purposes, the amount of credit shall be
restricted to so much of the input tax as is
attributable to the purposes of his business.
Restriction of ITC upto Taxable Supplies including Zero
rated Supply.
Sec 17 (2)
Where the goods or services or both are used by the
registered person partly for effecting taxable supplies
including zero-rated supplies under this Act (CGST Act) or
under the IGST Act and partly for effecting exempt
supplies under the said Acts (CGST & IGST Act), the
amount of credit shall be restricted to so much of the input
tax as is attributable to the said taxable supplies including
zero-rated supplies.
Example:
Mr A. Supplies his 60% Goods or Services @ 5%, 12%, 18%, 28%, and
15% goods and services @ 0% (which can be export of goods and
services) 25% Exempted Supply of Goods or Services
Mr. A bought goods or services to provide his outward supplies of goods

and services say for Rs. 1000000/- on which he paid GST @ 18% i.e Rs.
180000/-
Mr. A can claim out of Rs. 180000/- Input Credit as follows:

For 60% goods and services @ 5%, 12%, 18% 28% :-- 180000 X 60% = 108000
For 15% goods and services @ 0% :-- 180000 X 15% = 27000/-
For 25% exempted supplies:-- 180000 x 25% = 45000/-
ITC on the basis of Inputs used
Use of ITC
Partly Partly Non Partly

Partly Zero
Taxable Taxable Exempted
rated Supply
Supply Supply Supply
ITC Available for inputs

ITC not Available for
used for taxable part of
inputs used for Non
supply including zero
Taxable part of supply
rated part
Value of Exempt Supply shall include:
Sec 17 (3)
The value of exempt supply under Sec 17(2) shall be such as may be
prescribed, and shall include supplies on which the recipient is liable to
pay tax on reverse charge basis, transactions in securities, sale of land
and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
Note: Para 5 Clause (b) of schedule II defines supply of services of

construction of complex, building and civil structure.
An explanation to section 17(2) says that for the purposes of section

17(2) exempt supplies shall include supplies on which recipient is liable
to pay tax on reverse charge basis under section 8(3).
Apportionment of credit and blocked credits. Sec 17 (4)
A banking company or a financial institution including a non-
banking financial company, engaged in supplying services by
way of accepting deposits, extending loans or advances shall
have the option to either comply with the provisions of sub-
section (2), or avail of, every month, an amount equal to fifty
percent of the eligible input tax credit on inputs, capital goods
and input services in that month and the rest shall lapse:

Contnd…
Provided that the option once exercised shall not be withdrawn
during the remaining part of the financial year:
Provided further that the restriction of fifty percent shall not apply
to the tax paid on supplies made by one registered person to
another registered person having the same Permanent Account
Number.

Sec 17(5): Notwithstanding anything contained in Section 16(1)
and Section 18(1), input tax credit shall not be available in respect
of the following,
namely:—
(a) motor vehicles and other conveyances except when they are used––
(i) for making the following taxable supplies, namely:—
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles
or conveyances;
(ii) for transportation of goods;

Contnd…
(b) the following supply of goods or services or both—
(i)
Food and beverages, ITC cannot be availed Exception:
If engaged in
Outdoor catering, ITC cannot be availed similar line
of business,
Beauty treatment, ITC cannot be availed
then Full ITC
Health services, ITC cannot be availed can be
claimed on
Cosmetic and plastic surgery ITC cannot be availed these items
Contnd…
Exception:
Rent a cab services, ITC cannot be availed If engaged in similar
line of business or
there is mandatory
Life Insurance ITC cannot be availed requirement from
services, government to
provide such services
by employer to
Health Insurance
ITC cannot be availed employee then full
services, ITC can be claimed
on these items
Contnd…
Membership of a club,
health & fitness ITC cannot be availed
Centre
No Exception:
Leave Travel
Allowance benefit ITC cannot be availed
extended to
employees,

Contnd…
(c) works contract services when supplied for construction of an
immovable property (other than plant and machinery) ITC
Cannot be availed. Except where it is an input service for further
supply of works contract service; i.e engaged in similar line of
business, then Full ITC can be claimed on these items
(d) goods or services or both received by a taxable person for
construction of an 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.
ITC Cannot be availed. (It has no exception)
Explanation:––
For the purposes of clauses (c) and (d) of Section 17(5) [shown is previous slides], the
expression “construction” includes re-construction, renovation, additions or
alterations or repairs, to the extent of capitalisation, to the said immovable property;

(e) goods or services or both on which tax has been paid

under section 10; (Composition Scheme)
(f) goods or services or both received by a non-resident
taxable person except on goods imported by him; ITC
(g) goods or services or both used for personal consumption; cannot
(h) goods lost, stolen, destroyed, written off or disposed of be
availed
by way of gift or free samples; and
(i) any tax paid in accordance with the provisions of sections
74, 129 and 130.
The Government may prescribe the manner in which the credit
referred to in sub-sections (1) and (2) may be attributed.
Explanation.––For the purposes of this Chapter and Chapter VI, the

expression “plant and machinery” means apparatus, equipment, and
machinery fixed to earth by foundation or structural support that are
used for making outward supply of goods or services or both and
includes such foundation and structural supports but excludes—
• (i) land, building or any other civil structures;
• (ii) telecommunication towers; and
• (iii) pipelines laid outside the factory premises.

Connect us
CMA C. P. Kalra
CMA Arunava Chakraborty
CMA Md. Rehan
Chakraborty Kapoor & CO. LLP
Mob: +91-9911299105, +91-9990837823,

+91- 011-26275907
Email : cma.rehan@gmail.com
Website: www.cmackc.com
Address :Chirtanjan Park, New Delhi, 110019
Thank you
Analysis of Section 17 is made by CMA Md Rehan
PPT is made by CMA Md Rehan
Follow CMA Md Rehan on:
Linked In: https://www.linkedin.com/in/md-rehan/
Blogger: https://cmarehan.blogspot.in/
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GST Sec 17

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Chakraborty Kapoor & Co.

Goods and Service Tax:

Chakraborty Kapoor & Co. LLP ©

Mr. A bought goods or services to provide his outward supplies of goods

Mr. A can claim out of Rs. 180000/- Input Credit as follows:

Partly Partly Non Partly

ITC Available for inputs

Note: Para 5 Clause (b) of schedule II defines supply of services of

An explanation to section 17(2) says that for the purposes of section

Chakraborty Kapoor & Co. LLP ©

Chakraborty Kapoor & Co. LLP ©

Chakraborty Kapoor & Co. LLP ©

Chakraborty Kapoor & Co. LLP ©

Chakraborty Kapoor & Co. LLP ©

(e) goods or services or both on which tax has been paid

Explanation.––For the purposes of this Chapter and Chapter VI, the

Chakraborty Kapoor & Co. LLP ©

Mob: +91-9911299105, +91-9990837823,

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