Section 17.
Apportionment of credit and blocked credits.-
(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.
(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 or under the
Integrated Goods and Services Tax Act 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.
(3) The value of
exempt supply under sub-section (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.
1[Explanation.- For
the purposes of this sub-section, the expression "value of exempt
supply" shall not include the value of activities or transactions
specified in Schedule III, 4[except,—
(i) the value of
activities or transactions specified in paragraph 5 of the said Schedule; and
(ii) the value of
such activities or transactions as may be prescribed in respect of clause (a)
of paragraph 8 of the said Schedule.];]
(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 subsection (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 and
the rest shall lapse:
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option once exercised shall not be withdrawn during the remaining part of the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 per cent. shall not apply to the tax paid on supplies
made by one registered person to another registered person having the same
Permanent Account Number.
(5) Notwithstanding
anything contained in sub-section (1) of section 16 and sub-section (1) of
section 18, input tax credit shall not be available in respect of the
following, namely:-
2[(a) motor vehicles
for transportation of persons having approved seating capacity of not more than
thirteen persons (including the driver), except when they are used for making
the following taxable supplies, namely:-
(A) further supply of
such motor vehicles; or
(B) transportation of
passengers; or
(C) imparting
training on driving such motor vehicles;
(aa) vessels and
aircraft except when they are used-
(i) for making the
following taxable supplies, namely:-
(A) further supply of
such vessels or aircraft; or
(B) transportation of
passengers; or
(C) imparting
training on navigating such vessels; or
(D) imparting
training on flying such aircraft;
(ii) for
transportation of goods;
(ab) services of
general insurance, servicing, repair and maintenance in so far as they relate
to motor vehicles, vessels or aircraft referred to in clause (a) or clause
(aa):
Provided that the
input tax credit in respect of such services shall be available-
(i) where the motor
vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used
for the purposes specified therein;
(ii) where received
by a taxable person engaged-
(I) in the
manufacture of such motor vehicles, vessels or aircraft; or
(II) in the supply of
general insurance services in respect of such motor vehicles, vessels or
aircraft insured by him;]
(b) 3[the following
supply of goods or services or both-
(i) food and
beverages, outdoor catering, beauty treatment, health services, cosmetic and
plastic surgery, leasing, renting or hiring of motor vehicles, vessels or
aircraft referred to in clause (a) or clause (aa) except when used for the
purposes specified therein, life insurance and health insurance:
Provided that the input
tax credit in respect of such goods or services or both shall be available
where an inward supply of such goods or services or both 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;
(ii) membership of a
club, health and fitness centre; and
(iii) travel benefits
extended to employees on vacation such as leave or home travel concession:
Provided that the
input tax credit in respect of such goods or services or both shall be
available, where it is obligatory for an employer to provide the same to its
employees under any law for the time being in force.]
(c) works contract
services when supplied for construction of an 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
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.
Explanation.-For the
purposes of clauses (c) and (d), 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;
(f) goods or services
or both received by a non-resident taxable person except on goods imported by
him;
5[(fa) goods or
services or both received by a taxable person, which are used or intended to be
used for activities relating to his obligations under corporate social
responsibility referred to in section 135 of the Companies Act, 2013;]
(g) goods or services
or both used for personal consumption;
(h) goods lost,
stolen, destroyed, written off or disposed of by way of gift or free samples;
and
(i) any tax paid in
accordance with the provisions of sections 74, 129 and 130.
(6) 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.
