Blocked Credit on Construction of Immovable Property

Overview of Blocked Credits or Ineligible ITC:

Section 17(5), of the Central Goods and Services Tax Act (CGST Act), also known to be as Blocked Credits, is a very crucial provision for each and every Taxpayer registered under GST. It articulates a list of purchases on which GST is paid but the taxpayers aren’t allowed to claim Input Tax Credit (ITC).

17(5) Section under the CGST Act refers to a certain provision under GST covering Blocked Credits, also known as Ineligible Input Tax Credit (ITC). This a scenario where Taxpayer is unable to Claim any Input Tax Credit, regardless of paying output tax, on the purchases of certain goods or services or both that are specified under this section. There are 11 clauses under this provision, on which ITC is not available to be claimed.

Clause relating to blocked credit on immovable property:

As per the Specific provision in the Section 17(5) of CGST Act, Input Tax Credit shall not be available to taxpayer in the following cases:

• Where work contract services are involved, when the services are supplied for construction of immovable property, not including plant and machinery, except in the cases where it is an input service being supplied for the further supply of work contract service;

Where the taxable person is receiving goods or services or both, for the construction of immovable property, excluding plant or machinery, on his own accord. Also including the case where such goods or services or both are utilized during the furtherance of business.