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CA Intermediate · Taxation · Input Tax Credit

Anil Associates, a registered person, incurred the following GST on inward supplies in a month: (i) food and beverages for staff outing, GST Rs 8,000, not required by law to be provided; (ii) motor vehicle (seating capacity 5) purchased for official use, GST Rs 1,50,000, not used for transport of passengers or training; (iii) raw material for taxable output, GST Rs 60,000. Assuming all other conditions are met, what is the maximum ITC available?

The maximum ITC is Rs 60,000. Credit on staff outing food and beverages and on a five-seater car for ordinary official use is blocked under the CGST Act, so only the credit on raw material for taxable output is available.

  1. ARs 2,18,000
  2. BRs 60,000Correct
  3. CRs 2,10,000
  4. DRs 68,000

Explanation

Section 17(5) blocks ITC on food and beverages unless the employer is obliged by law to provide them, and on motor vehicles for transporting not more than 13 persons unless used for specified purposes such as passenger transport or training. So items (i) and (ii) are blocked. Only the raw material credit of Rs 60,000 is allowed. Rs 68,000 wrongly allows the food, and Rs 2,10,000 wrongly allows the vehicle.

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