1.
MOTOR VEHICLES & CONVEYANCES
-ITC is not available for motor vehicles and
conveyances.
For example,
Chingudi
& Co. buys a car for their business.
They cannot
claim ITC on the same.
-Exceptions
to ITC on motor vehicles
ITC will be available when the vehicle is used for
the following.
a) Supply of
other vehicles or conveyances
-If you are
in the business of supplying cars then ITC will be available.
For example,
a car dealer purchases a car for Rs.25 lakh plus 07 lakh GST (ignoring cess
calculations).
The same car
was later sold for 50 lakhs along with Rs.14 lakh GST.
Since he is
a dealer, he can claim ITC of 7 lakhs and pay only Rs.7 lakh (14 – 7).
b)
Transportation of passengers
If you are
providing transportation of passengers then ITC will be allowed on the vehicle
purchased.
For example,
Chingudi Tours purchased a bus for inter-city transport of passengers from
Bhubaneswar to Bhadrak.
ITC is
available.
c) Imparting
training on driving, flying, navigating such vehicle or conveyances
A driving
school purchases a car to give training to students.
The school
can claim ITC on the GST paid on the car.
d)
Transportation of goods
ITC will be
allowed on motor vehicles (and other conveyances) used to transport goods from
one place to another.
However,
this is concerning other transporters and not goods transport agencies (GTA).
2.
FOOD, BEVERAGES, CLUB MEMBERSHIPS AND OTHERS
ITC is not for the supply of following goods or
services or both:
*Food and
beverages
*Outdoor
catering
*Beauty
treatment
*Health
services
*Cosmetic
and plastic surgery
However, ITC will be available if the category of
inward and outward supply is same,
or the component belongs to a mixed or composite
supply under GST.
Examples-
Chingudi
Enterprises arranges for an office party for its employees.
Chingudi
Enterprises will not be able to claim ITC on the food & beverages served.
3.
SALE OF MEMBERSHIP IN A CLUB, HEALTH, FITNESS CENTRE
No ITC will be allowed on any membership fees for
gyms, clubs etc.
Example-
Miss N.N, a
Managing Director has taken membership of a club and the company pays the
membership fees.
ITC will not
be available to the company or Miss. N.N.
4.
RENT-A-CAB, LIFE INSURANCE, HEALTH INSURANCE
ITC is not available for rent-a-cab, health
insurance and life insurance.
However, the following are exceptions,
i.e., ITC is
available for-
a. Any services
which are made obligatory for an employer to provide its employee by the Indian
Government under any current law in force.
For example,
Assuming the
government passes a rule for all employers to provide mandatory cab services to
female staff in night shifts.
Nayak Ltd.
hires a rent-a-cab to provide to transportation to its female staff on night
shifts.
Then ITC
will be available to Nayak Ltd. on the GST paid to the rent-a-cab service.
b. If the
category is same for the inward supply and outward supply or it is a part of
the mixed or composite supply.
For example,
Chingudi
Travels lends out a car to Haathi Travels.
Then Haathi
Travels can claim ITC on the same.
5.
TRAVEL
ITC is not available in the case of travel,
benefits extended to employees on vacation such as leave or home travel
concession.
For example,
Nayak Ltd.
offers a travel package to its employees for personal holidays.
ITC on GST
paid by Nayak Ltd. for the holiday package will not be allowed.
ITC will be
allowed for travel for business purposes.
6.
WORKS CONTRACT
ITC shall not be available for any work contract
services.
ITC for the
construction of an immovable property cannot be availed,
except where the input service is used for further
work contract services.
For example,
Mita
Contractors are constructing an immovable property.
They cannot
claim any ITC on the works contract.
However,
Mita hires Bittu Contractors for a portion of the works contract.
Mita can
claim ITC on the GST charged by Bittu Contractors.
7.
CONSTRUCTING AN IMMOVABLE PROPERTY ON OWN ACCOUNT
No ITC is available for goods/services for
construction of an immovable property on his own account.
Even if such
goods/services are used in the course or furtherance of business,
ITC will not
be available.
But this rule does not apply to plant or
machinery.
ITC is available on inputs used to manufacture
plant and machinery for own use.
Example-
*Nayak Steel
Industries constructs an office building for its headquarters.
ITC will not be available.
*Nayak Steel
Industries also constructs a blast furnace to manufacture steel.
ITC is available since it is a plant.
8.
NO ITC ON RESTAURANTS
As per
Notification No. 46/2017-Central Tax (Rate), dated 14th November 2017,
Standalone restaurants will charge only 5% GST but
cannot enjoy any ITC on the inputs.
However, restaurants as part of hotels with room
tariffs exceeding Rs. 7,500 still continue pay 18% GST and enjoy ITC.
-Domino's
charges 5% GST and cannot claim any ITC.
-Hotel
Holiday Resort by the Gajapati restaurant in Puri is a part of the Hotel
Holiday Resort so it will charge 18% GST while enjoying ITC.
9. COMPOSITION
SCHEME
No ITC would be available to the person who has
made the payment of tax under composition scheme in GST law.
10.
NO ITC FOR PERSONAL USE
No ITC will be available for the goods/ services
used for personal purposed and not for business purposes.
11.
NO ITC FOR NON-RESIDENTS
ITC cannot be availed on goods/services received
by a non-resident taxable person.
ITC is only available on any goods imported by
him.
12.
NO ITC IN FRAUD CASES
ITC will not be available for any tax paid due to
fraud cases which has resulted into –
-Non or
short tax payment or
-Excessive
refund or
-ITC
utilised or
-Fraud cases
include fraud or willful misstatements or suppression of facts or confiscation
and seizure of goods.
13.
FREE SAMPLES AND DESTROYED GOODS
No ITC is available for goods lost, stolen,
destroyed, written off or given off as gift or free samples.
