Compliance Tool / CA Checklist

Section 17(5) Blocked Credit & Ineligible ITC Checker (2026)

Verify GST blocked credit eligibility under Section 17(5). Identify ineligible ITC on motor vehicles, food, insurance, and building construction before filing GSTR-3B.

Quick Answer: What Is Section 17(5) Blocked Credit under GST?

Section 17(5) lists goods and services ineligible for Input Tax Credit (ITC) even if used for business purposes. Key blocked items: passenger vehicles (≤13 seats), vehicle insurance/repairs, food & catering, club membership, personal expenses, and immovable property construction. Ineligible ITC must be permanently reversed in GSTR-3B Table 4(B)(1).

  • Motor vehicles with ≤13 seating capacity are blocked (except for car dealers/driving schools).
  • Food, beverages, and catering ITC is blocked unless sold as a taxable outward service.
  • Report permanent ITC reversals in Table 4(B)(1) of Form GSTR-3B.
  • Wrongly claiming blocked credit attracts 18%–24% interest and penalty notices.

Section 17(5) Negative List Checklist & Eligibility

Expense CategoryITC StatusStatutory Exception / Note
Passenger Motor Vehicles (≤ 13 Seats)BlockedAllowed ONLY for vehicle dealers, driving schools, or passenger transport businesses.
Vehicle Insurance & Maintenance (≤ 13 Seats)BlockedAllowed ONLY if the underlying motor vehicle itself qualifies for ITC.
Goods Transport Vehicles (Trucks, Lorries)Allowed100% ITC eligible for all business inward supplies.
Food, Beverages & Outdoor CateringBlockedAllowed ONLY if outward supply is in the same category (e.g. restaurant/caterer).
Immovable Property ConstructionBlockedAllowed ONLY for Plant & Machinery construction or works contract input services.
Membership of Club, Health & FitnessBlockedStrictly ineligible under Section 17(5)(b)(ii).
Goods Written Off, Stolen, or Free SamplesBlockedITC must be reversed if goods are written off, gifted, or destroyed.
Corporate Social Responsibility (CSR) ExpensesBlockedExplicitly blocked under Section 17(5)(fa).

How to Record Blocked Credit Reversal in Tally Prime (GSTR-3B Table 4B1)

1
Open Journal Voucher (F7)

Go to Gateway of Tally > Vouchers > F7 Journal.

2
Select Statutory Adjustment (Alt+J)

Press Alt+J > Type of Duty/Tax: GST > Nature of Adjustment: Reversal of Input Tax Credit.

3
Debit ITC Reversal / Credit Tax Ledgers

Debit the ITC Reversal Expense ledger and Credit CGST, SGST, or IGST input ledgers.

4
Verify GSTR-3B Table 4(B)(1)

Check Alt+G > GSTR-3B. Ensure the reversed amount appears under Table 4(B)(1) Permanent Reversals.

Prevent Section 17(5) Reversal Mismatches in Tally

Post verified purchase vouchers with accurate ITC eligibility tagging.

TrulyInvoice AI flags blocked ITC items during vendor PDF invoice parsing, ensuring expense ledgers are tagged correctly before posting F9 Purchase Vouchers to Tally Prime.

Frequently Asked Questions

What is Section 17(5) blocked credit under GST?▾
Section 17(5) of the CGST Act is a statutory negative list specifying goods and services on which Input Tax Credit (ITC) cannot be claimed, even if used for business furtherance (e.g. passenger cars ≤13 seats, food & catering, personal consumption, building construction).
Where should Section 17(5) blocked ITC be reported in GSTR-3B?▾
Blocked ITC under Section 17(5) must be permanently reversed in Table 4(B)(1) of Form GSTR-3B. It is no longer reported under Table 4(D) following the 2022 GST reporting reforms.
Is ITC allowed on commercial vehicles (trucks, lorries)?▾
Yes. ITC is allowed on commercial goods transportation vehicles (trucks, tempos, lorries) and passenger vehicles with seating capacity exceeding 13 persons. Insurance and repair costs for these vehicles are also 100% ITC-eligible.
How to record Section 17(5) ITC reversal in Tally Prime?▾
In Tally Prime, pass an F7 Journal Voucher using Alt+J (Stat Adjustment) > Type: GST > Nature of Adjustment: Reversal of Input Tax Credit. Select permanent reversal mapping to reflect in Table 4(B)(1) of GSTR-3B.
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