Saturday 7 January 2017

Section-17. Apportionment of credit and blocked credits

                 Section-17.               Apportionment of credit and blocked credits

(1) Where the goods and/or services are used by the registered taxable 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.

(2) Where the goods and / or services are used by the registered taxable person
partly for effecting taxable supplies including zero-rated supplies under this Act
or under the IGST Act, 2016 and partly for effecting exempt supplies under the
said Acts, 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.

Explanation.- For the purposes of this sub-section, exempt supplies shall include
supplies on which recipient is liable to pay tax on reverse charge basis under subsection
(3) of section 8.

(3) 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 per cent of the
eligible input tax credit on inputs, capital goods and input services in that month.

Explanation.- The option once exercised shall not be withdrawn during the
remaining part of the financial year.

(4) Notwithstanding anything contained in sub-section (1) of section 16 and subsection
(1), (2), (3) and (4) of section 18, input tax credit shall not be available
in respect of the following:

(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

(ii) for transportation of goods.

(b) supply of goods and services, namely,

(i) food and beverages, outdoor catering, beauty treatment, health
services, cosmetic and plastic surgery except where such inward
supply of goods or services of a particular category is used by a
registered taxable person for making an outward taxable supply of
the same category of goods or services;

(ii) membership of a club, health and fitness centre,

(iii) rent-a-cab, life insurance, 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; and

(iv) travel benefits extended to employees on vacation such as leave or
home travel concession.

(c) works contract services when supplied for construction of immovable
property, other than plant and machinery, except where it is an input service
for further supply of works contract service;

(d) goods or services received by a taxable person for construction of an
immovable property on his own account, other than plant and machinery,
even when used in course or furtherance of business;

Explanation 1.- For the purpose of this clause, the word “construction” includes
re-construction, renovation, additions or alterations or repairs, to the extent of
capitalization, to the said immovable property.

Explanation 2.- ‘Plant and Machinery’ means apparatus, equipment, machinery,
pipelines, telecommunication tower fixed to earth by foundation or structural
support that are used for making outward supply and includes such foundation
and structural supports but excludes land, building or any other civil structures.

(e) goods and/or services on which tax has been paid under section 9;
(f) goods and/or services used for personal consumption;

(g) goods lost, stolen, destroyed, written off or disposed of by way of gift or free
samples; and

(h) any tax paid in terms of sections 67, 89 or 90.

(5) The Central or a State Government may, by notification issued in this behalf,
prescribe the manner in which the credit referred to in sub-sections (1) and (2)
above may be attributed.


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