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CS Executive · Tax Laws and Practice · Input Tax Credit and Computation of GST Liability

Meera Hospitality Pvt Ltd, a registered restaurant-services provider, receives outdoor catering services which it uses to make an outward taxable supply of outdoor catering. Under section 17(5), the input tax credit on these inward catering services is:

Credit is available. Although outdoor catering is generally blocked, credit is allowed where the inward supply is used for making an outward taxable supply of the same category, as in this case, so the block does not apply.

  1. ABlocked, since food and beverages and outdoor catering are always blocked
  2. BAvailable, because the inward supply is used for an outward taxable supply of the same categoryCorrect
  3. CAvailable only at 50%
  4. DAvailable only if the catering is obligatory under any law

Explanation

Food and beverages and outdoor catering are blocked, but the proviso allows credit where the inward supply is used to make an outward taxable supply of the same category or as an element of a taxable composite or mixed supply. Meera's use fits this proviso. The 'obligatory under law' condition relates to employee travel benefits, not this case.

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