SECTION 17 OF CGST ACT AMENDED IN ORDER TO FURTHER EXPAND THE ELIGIBILITY OF INPUT TAX CREDIT (ITC)

In this article, we will discuss the latest amendments in section 17 of CGST Act, 2017 (Apportionment of credit and blocked credit).

Newly inserted explanation to Section 17(3) : ‘Explanation.—For the purposes of this sub-section, the expression ‘‘value of exempt supply’’ shall not include the value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said Schedule.’

Section 17(5) amended as follows :

Clause (a) and (b) replaced with (a), (aa), (ab) and (b) :

Replaced clauses : (a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely :— (A) further supply of such motor vehicles; or (B) transportation of passengers; or (C) imparting training on driving such motor vehicles.

(aa) vessels and aircraft except when they are used––(i) for making the following taxable supplies, namely:—(A) further supply of such vessels or aircraft; or (B) transportation of passengers; or (C) imparting training on navigating such vessels; or (D) imparting training on flying such aircraft; (ii) for transportation of goods.

(ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa).

Provided that the input tax credit in respect of such services shall be available— (i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein; (ii) where received by a taxable person engaged— (I) In the manufacture of such motor vehicles, vessels or aircraft; or (II) In the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him;

(b) the following supply of goods or services or both— (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance ;

Provided that the input tax credit in respect of such goods or services or both shall be available where : (i) an inward supply of such goods or services or both 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 center; and (iii) travel benefits extended to employees on vacation such as leave or home travel concession.

Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.

AUTHOR : CA SRISHTI SULTANIA

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