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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Input Tax Credit and Computation of GST Liability

Under Section 17(5), which of the following inward supplies received by a registered manufacturing company would have its ITC blocked, with no exception applying?

Goods received for constructing a factory building on own account are blocked. Section 17(5)(d) denies ITC on construction of immovable property other than plant and machinery, even when used in business. The other three situations fall within express exceptions that keep credit available.

  1. AGoods received for construction of a factory building on its own account, where the building is not plant and machineryCorrect
  2. BServices of general insurance for a motor vehicle used for transportation of passengers by a taxi operator
  3. CGoods imported by a non-resident taxable person
  4. DWorks contract services used as an input service for further supply of works contract service

Explanation

Section 17(5)(d) blocks goods or services received for construction of an immovable property (other than plant and machinery) on own account, even if used in business. The other options fall within stated exceptions: insurance for vehicles used for passenger transport, goods imported by a non-resident taxable person, and works contract used for further works contract supply.

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