Blocked credit is where reconciliation and tax law part ways. Your register agrees with GSTR-2B, the goods have arrived, the invoice is inside the time limit, and the credit is still not yours. This guide goes through the Section 17(5) list clause by clause, with the exceptions as the Act writes them, then runs eight invoices through it in rupees.
For the wider rules, start with input tax credit meaning: the conditions and how GSTR-2B decides it.
What Section 17(5) says and how it fits with Section 16
Section 16(1) entitles a registered person to credit of input tax on supplies used or intended to be used in the course or furtherance of business. Section 17(5) of the CGST Act overrides it. The opening words are:
“Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:-” Section 17(5), CGST Act
Section 16(2) and Section 17(5) are two separate gates. Passing the first (invoice, 2B, receipt, payment, return, time limit) does not open the second. The Section 16 conditions guide covers the first gate; this page covers the second.
The Section 17(5) list, clause by clause
The table follows the text on the CBIC page checked on 1 October 2026. The right-hand column follows the exceptions written in the section; where it says none, the clause has none.
| Clause | What is blocked | When credit is still available, as written |
|---|---|---|
| (a) | Motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver) | When used for further supply of such vehicles, transportation of passengers, or imparting training on driving such vehicles |
| (aa) | Vessels and aircraft | When used for further supply of such vessels or aircraft, transportation of passengers, imparting training on navigating vessels or flying aircraft, or for transportation of goods |
| (ab) | Services of general insurance, servicing, repair and maintenance in so far as they relate to the vehicles, vessels or aircraft in clause (a) or (aa) | Where those vehicles, vessels or aircraft are used for the purposes in (a) or (aa), or where the service is received by a taxable person who manufactures them or supplies general insurance for them |
| (b)(i) | Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of the vehicles, vessels or aircraft in (a) or (aa) except when used for the purposes there, life insurance and health insurance | Where the inward supply is used for an outward taxable supply of the same category of goods or services, or as an element of a taxable composite or mixed supply |
| (b)(ii) | Membership of a club, health and fitness centre | The proviso at the end of clause (b) makes credit available where it is obligatory for an employer to provide the same to its employees under any law for the time being in force |
| (b)(iii) | Travel benefits extended to employees on vacation such as leave or home travel concession | Same proviso: where it is obligatory for an employer under any law |
| (c) | Works contract services when supplied for construction of an immovable property (other than plant and machinery) | Where it is an input service for further supply of works contract service |
| (d) | Goods or services received for construction of an immovable property (other than plant and machinery) on own account, including when used in the course or furtherance of business | No exception written in the clause |
| (e) | Goods or services on which tax has been paid under Section 10 (composition levy) | No exception written in the clause |
| (f) | Goods or services received by a non-resident taxable person | Except on goods imported by him |
| (fa) | Goods or services used or intended to be used for activities relating to corporate social responsibility under Section 135 of the Companies Act, 2013 (clause in force from 1 October 2023) | No exception written in the clause |
| (g) | Goods or services used for personal consumption | No exception written in the clause |
| (h) | Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples | No exception written in the clause |
| (i) | Any tax paid in accordance with Section 74 in respect of any period up to Financial Year 2023-24 | No exception written in the clause |
Three clauses that need a closer read
Motor vehicles, clause (a)
The test is the approved seating capacity: not more than thirteen persons including the driver. A car bought for the directors falls in the clause unless it is used for one of the three listed taxable supplies, such as transportation of passengers. How a particular vehicle is classified depends on its approved seating capacity and use, so settle that with your CA in either direction. Under clause (ab), servicing, repair and general insurance of a blocked vehicle are blocked with it.
Food and beverages, clause (b)(i)
Staff lunches and canteen catering fall in the first words of the clause. The proviso is narrow: it restores credit where the inward supply is used to make an outward taxable supply of the same category, or is an element of a taxable composite or mixed supply. Whether your business meets that depends on what you sell, so write down the reasoning for each category of spend.
Construction, clauses (c) and (d)
Clauses (c) and (d) both turn on immovable property “other than plant and machinery”. Explanation 1 says that, for these clauses, “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation. The Explanation at the end of Section 17 defines plant and machinery as apparatus, equipment and machinery fixed to earth by foundation or structural support and used for making outward supply, and it excludes land, building or any other civil structures, telecommunication towers and pipelines laid outside the factory premises.
Check the wording you are reading. Older notes quote clause (d) as “plant or machinery”. The current text says “plant and machinery”, substituted by the Finance Act (No. 7), 2025 and deemed substituted from 1 July 2017, and Explanation 2 says references to “plant or machinery” are read as “plant and machinery”. A construction credit decision based on an older summary needs a second look.
Worked example: eight invoices, one month
A manufacturing company in Pune closes its September 2026 books. GSTR-2B is generated on 14 October 2026 and GSTR-3B is due on 20 October 2026. All eight invoices below are in GSTR-2B, all goods and services have been received, and the tool would show every one as Matched. The amounts are the GST charged on each invoice.
| Invoice | GST charged | Section 17(5) check | Claim |
|---|---|---|---|
| Steel sheet for production | ₹95,400 | Not in the list | ₹95,400 |
| Packing material | ₹18,000 | Not in the list | ₹18,000 |
| Sedan for the managing director (five seats including the driver) | ₹1,12,000 | Clause (a); not used for the listed supplies | ₹0 |
| Servicing of the same sedan | ₹3,780 | Clause (ab) | ₹0 |
| Fitness centre membership for staff, taken voluntarily | ₹16,200 | Clause (b)(ii); no law obliges the company | ₹0 |
| Staff lunch catering | ₹4,500 | Clause (b)(i); the company does not sell catering | ₹0 |
| Contractor's works contract to construct a new factory shed, capitalised in the books | ₹2,70,000 | Clause (c); not an input service for further works contract | ₹0 |
| Festival gift hampers given to customers | ₹7,200 | Clause (h); goods disposed of by way of gift | ₹0 |
| Total | ₹5,27,080 | ₹1,13,400 |
The eight invoices carry ₹5,27,080 of GST. Six are blocked: ₹1,12,000 + ₹3,780 + ₹16,200 + ₹4,500 + ₹2,70,000 + ₹7,200 = ₹4,13,680. The claim is ₹5,27,080 − ₹4,13,680 = ₹1,13,400, which is the steel sheet and packing material, ₹95,400 + ₹18,000. A reconciliation that stops at “Matched” shows all ₹5,27,080 as clean and would lead to an over-claim of ₹4,13,680.
The exceptions are the part to double-check. If the sedan were bought by a business that provides transportation of passengers, clause (a) would not block it. If the law obliged the company to provide the fitness facility to employees, the proviso to clause (b) would apply. That is why the table records the reason beside each rupee figure.
How blocked credit shows up in your reconciliation and return
- It shows up as a perfect match. GSTR-2B is built from what suppliers report, so a supplier's invoice for catering looks like any other invoice. Add a “blocked” flag column to your purchase register and fill it before you read the matched total. The GSTR-2B and ITC guide shows where the 2B total sits in the claim, and what GSTR-2B is explains what the statement is built from.
- The portal's ineligible line is not a substitute. GSTN describes GSTR-3B Table 4D(2), “Ineligible ITC under section 16(4) & ITC restricted due to PoS rules”, as auto-populated from GSTR-2B. It does not name Section 17(5).
- You declare the outcome. The same FAQ says only eligible and ineligible ITC need to be declared in Table 4. For the row that carries Section 17(5) credit, read the current GSTR-3B help text or ask your CA; we have not verified it here.
- Pre-filled ITC figures can be edited. The FAQ says the auto-populated values are editable as of now, with a warning when Table 4A is edited upwards, so remove blocked credit before filing. If a claim ends up above 2B, see the DRC-01C reply guide.
Common mistakes
- Treating a Matched invoice as claimable. Matching proves the supplier reported it. It does not test the purpose of the purchase.
- Assuming an exception without the facts. Each exception is tied to use. Keep the records that show the use: how a vehicle is used in your business, or the legal requirement behind a staff benefit.
- Missing blocked GST inside a bigger bill. A hotel or event invoice can mix food and catering with other items. Split the lines.
Frequently asked questions
What is blocked credit under GST?
Blocked credit is input tax credit that Section 17(5) of the CGST Act says shall not be available, even though the purchase is for business. The section applies notwithstanding Section 16(1) and lists the goods and services concerned, several of them with exceptions.
Is ITC available on a car bought for the business?
Not on a motor vehicle for transportation of persons with approved seating capacity of not more than thirteen persons including the driver, unless it is used for further supply of such vehicles, transportation of passengers or driving training. This is Section 17(5)(a). Check the vehicle details and your use with your CA.
Is ITC allowed on food and catering?
Section 17(5)(b)(i) blocks credit on food and beverages and outdoor catering. Its proviso makes credit available where the inward supply is used for an outward taxable supply of the same category or as an element of a taxable composite or mixed supply.
Does an invoice with blocked credit still appear in GSTR-2B?
It can. GSTR-2B is built from what suppliers report. GSTN describes the ineligible line in GSTR-3B Table 4D(2) as covering Section 16(4) and place-of-supply restrictions, and does not name Section 17(5). Classify blocked credit yourself before you claim.
Get the matched list, then flag the blocked lines
gstr2bmatch.in compares your purchase register with GSTR-2B and shows which invoices are matched, mismatched, missing from 2B or only in 2B, with the rupee figure for each. It does not decide whether a purchase falls under Section 17(5), so use the matched list as the starting point for your blocked-credit review. Your GSTR-2B and purchase register files are read in your browser and never uploaded to any server.
Related guides
- input tax credit meaning: conditions and how GSTR-2B decides it
- ineligible input tax credit: eligible vs ineligible ITC
- Restaurant ITC blocked under GST 5 percent
- ITC reversal under Section 17(5)(d) for building and civil structure expenses
- ITC on club, health and fitness centre corporate memberships
- ITC eligibility on employee term insurance and mandatory gratuity
- ITC on hotel accommodation and guest house stays under GST: place of supply rules and credit eligibility
- ITC on promotional display racks, glow signs, and retail fixtures in FMCG modern trade
- ITC on factory staff uniform, mandatory safety shoes, and personal protective equipment
- ITC on CSR expenditure: Section 17(5)(fa) statutory amendment explained
- GST input tax credit on car purchase for company
- ITC on fire fighting equipment and plant safety installation
Last checked: 1 October 2026. Sources: CGST Act, Section 17, CGST Act, Section 16, CGST Act, Section 10, GSTN GSTR-3B user guide, GSTN DRC-01C advisory.