Suggestions on GST Acts (July 2017) by Institute of Chartered Accountants of India
18. Blocking of Input Tax Credit for certain set of Services
Section 15(5)(b) of CGST Act, 2017 provides that no input tax credit is available on supply of goods or services or both: —
i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category 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;
iii) rent-a-cab, life insurance and health insurance with provided exceptions
iv) travel benefits extended to employees on vacation such as leave or home travel concession.
Issue
Certain expenditure of the given nature can also be required to be made under the requirements of any law and not necessarily for making taxable outward supplies of the same category. Say, for example, food and beverages used in the canteen of a factory. Suggestion It is suggested that the facility of availing input tax credit not be blocked when goods and/or services are used or intended to be used in the course or furtherance of business in lines with the provisions of Section 17(1). Disallowances of such credit is not best practices anywhere in the world
Read ICAI Suggestions on GST Act to Govt : July 2017
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