Section 17(5) — Blocked credits
Section 17(5) of the CGST Act is the list of ineligible or 'blocked' credits — inward supplies on which ITC cannot be claimed even if used for business.
Section 17(5) names the supplies on which ITC is barred no matter how they are used — most motor vehicles, food and beverages, membership of clubs, and goods or services for construction of immovable property. Even valid tax invoices appearing in GSTR-2B do not make a blocked credit claimable.
Section 17(5) is the exception list that overrides the general entitlement in Section 16. Common blocks include clause (c) and clause (d) — works-contract and other goods/services used for constructing immovable property on one's own account — plus motor vehicles, health insurance, and free samples. If a credit falls here, it is ineligible even when every other Section 16 box is ticked.
A crucial 2026 point: the Supreme Court's Safari Retreats ruling had briefly opened ITC on certain leased-out buildings via a 'functionality test', but the Finance Act 2025 retrospectively amended Section 17(5)(d) — replacing 'plant or machinery' with 'plant and machinery' from 1 July 2017 — so ITC on immovable-property construction remains blocked. Do not claim it. Other frequently-litigated blocks include CSR expenditure and goods lost, stolen or given as free samples, which should all be tagged ineligible at source.
The Recoup angle: Recoup tags likely 17(5) expense heads at ingestion so blocked credits never reach your GSTR-3B claim.