# Other Blocked Credits under Section 17(5)

A grab-bag of items beyond conveyances and construction that are denied ITC.

## (6) Tax Paid on Supply from Composition Supplier — ITC NOT allowed

Composition supplier cannot collect tax; recipient cannot avail ITC.

## (7) Tax Paid on Personal Consumption — ITC NOT allowed

Must be for business; personal use is blocked.

## (8) Goods/Services Used for CSR Activities — ITC NOT allowed

Specific bar even though CSR is a corporate compliance.

## (9) Free Samples, Gifts, Lost, Destroyed, Stolen or Written-off Goods

Situation	Treatment
Lost / Destroyed / Stolen / Written-off — ITC already taken	Reverse the ITC
Lost / Destroyed / Stolen / Written-off — ITC not yet taken	ITC NOT allowed
Gifts / Free Samples — ITC not taken	ITC NOT allowed
Gifts / Free Samples — ITC taken, but Schedule I transaction	ITC ALLOWED, but pay tax on the deemed supply
Gifts / Free Samples — ITC taken, NOT Schedule I	Reverse the ITC

### Applied to common sales promotion schemes

Scheme	ITC Eligibility
Free samples / Free gifts	Not eligible (unless Schedule I)
Buy-One-Get-One (BOGO)	Eligible — combined supply, tax discharged on bundle
Buy More Save More	Eligible — volume discount, taxable
Secondary discount	Eligible — not free supply

## (10) Non-Resident Taxable Person (NRTP)

Inward Supply	ITC
Domestic goods and services	NOT allowed
Import of services	NOT allowed
Import of goods	ALLOWED

## (11) Tax Paid Under Section 74 (Fraud) for periods up to FY 2023-24

ITC NOT allowed (since this is tax paid pursuant to fraud / suppression).

Worked example

### Example 1

Example 1 — Free samples vs BOGO

A pharma company distributes free physician samples (cost ₹50,000 + GST ₹9,000). Same company runs a 'Buy 1 Strip Get 1 Free' scheme on retail product.

Free physician samples: ITC of ₹9,000 must be reversed (or not availed) — not Schedule I.
BOGO: Combined transaction at single price; ITC on inputs is fully available, tax is charged on the consolidated price.

### Example 2

Example 2 — Stock destroyed in fire

Goods worth ₹5,00,000 (ITC ₹90,000 availed) destroyed by fire.

Reverse ₹90,000 in the GSTR-3B of the period of destruction.
Insurance claim received does not change the reversal obligation under GST.

⚠️ Common exam mistakes

Claiming ITC on CSR spends — specifically barred by clause (fa).
Treating BOGO and free samples identically — BOGO is a regular taxable supply at a single consolidated price.
An NRTP claiming ITC on domestic purchases — only ITC on imported goods is allowed.
Forgetting to reverse ITC when stock is written off or destroyed.
A composition recipient (rare scenario) attempting to claim ITC — composition supplier cannot even charge tax.

Bare-Act text Section 17(5)(e) to (i) · CGST Act, 2017 · click to expand

Section 17(5): ITC shall not be available in respect of — (e) goods or services or both on which tax has been paid under Section 10 (composition levy); (f) goods or services or both received by a non-resident taxable person except on goods imported by him; (fa) goods or services or both used or intended to be used for activities relating to obligations under corporate social responsibility referred to in Section 135 of the Companies Act, 2013; (g) goods or services or both used for personal consumption; (h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and (i) any tax paid in accordance with the provisions of Sections 74, 129 and 130 (for tax periods up to FY 2023-24).

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Other Blocked Credits - Composition, Personal Use, CSR, Free Samples, NRTP, Section 74

Worked example

⚠️ Common exam mistakes