(Blocked Credit)

(a) Motor vehicles & conveyances

ITC is not available for Motor vehicles used to transport persons, having a seating capacity of less than or equal to 13 persons (including the driver). For example, XYZ & Co. buys a car for their business. They cannot claim ITC on the same. But ITC will be available when the vehicle is used for making taxable supplies by the following.

If you are in the business of supplying other vehicles or conveyances, vessels or aircrafts then ITC will be available.

If you are providing transportation of passengers then ITC will be allowed on the vehicle purchased.

ITC will be available to the school imparting training on driving, flying, navigating such vehicle or conveyances or vessels or aircrafts, respectively.

ITC will be allowed on motor vehicles (and other conveyances) used to transport goods from one place to another. However, this is concerning other transporters and not goods transport agencies (GTA).

(b) ITC is not available for the supply of following goods or services or both:

• Food and beverages
• Outdoor catering
• Beauty treatment
• Health services
• Cosmetic and plastic surgery

However, ITC will be available if the category of inward and outward supply is same or the component belongs to a mixed or composite supply under GST.

c.) No ITC is allowed on services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft.

Exceptions to ITC on insurance, repair or maintenance

• Same as exceptions mentioned for motor vehicles/vessels/aircrafts
• 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

(e) No ITC will be allowed on any membership fees for gyms, clubs etc.

(f) ITC is not available for rent-a-cab, health insurance and life insurance

Exceptions:

Any services which are made obligatory for an employer to provide its employee by the Indian Government under any current law in force

If the category is same for the inward supply and outward supply or it is a part of the mixed or composite supply

ITC is not available in the case of travel, benefits extended to employees on vacation such as leave or home travel concession

(g) ITC shall not be available for any work contract services.

(h) No ITC is available for goods/services for construction of an immovable property on his own account. Even if such goods/services are used in the course or furtherance of business, ITC will not be available. But this rule does not apply to plant or machinery.ITC is available on inputs used to manufacture plant and machinery for own use.

(i) No ITC would be available to the person who has made the payment of tax under composition scheme in GST law

(j) ITC cannot be availed on goods/services received by a non-resident taxable person. ITC is only available on any goods imported by him.

(k)No ITC for personal use

(l)No ITC in fraud cases

(m)No ITC on restaurants

Presently, under section 44AB of the Income Tax Act, every person carrying on business is required to get his accounts audited,

• If his total sales, turnover or gross receipts, in business exceed or exceeds 1 crore rupees in any previous year
• In case of a person carrying on profession he is required to get his accounts audited, if his gross receipt in profession exceeds, 50 lakh rupees in any previous year.

In order to reduce compliance burden on small and medium enterprises, through Finance Act 2020,w.e.f.01.04.2020 the threshold limit for a person carrying on business was increased from 1 crore rupees to 5 crore rupees in cases where,-

• Aggregate of all receipts in cash during the previous year does not exceed 5% of such receipt; and
• Aggregate of all payments in cash during the previous year does not exceed 5% of such payment.

Further, as per notice of amendment to Finance Bill 2021 given by Union Finance Minister in Lok Sabha, for the purpose of the above amendment, payment or receipt by cheque and/or draft which is not account payee shall be considered as in cash.

This amendment will take effect from 1st April, 2021 and will accordingly apply for the assessment year 2021-22 and subsequent assessment years.

• The taxpayer must be an Individual or HUF. The benefit of exemption is not available to the company, LLP, or Firm.
• The asset sold is a Long Term Capital Asset (LTCA) other than House Property
• On the date of sales, the taxpayer does not own more than one house property
• A new Residential House is purchased before 1 year or after 2 years from the sale of the long term capital asset, or
• In case of construction of a new House Property, within 3 years from the sale of the residential House Property.
• A new Residential House should be in India.

Exemption = Cost of new asset x Capital Gains / Net Consideration

Maximum Exemption is up to Capital Gains.

Section 185 (as amended by the Companies (Amendment) Act, 2017):

• Limits the provisions of prohibition on loans, advances, etc. to Directors of the company or its holding company or any partner of such Director or any partner of such Director or any firm in which such Director or relative is a partner
• Allows the company to give a loan or guarantee or provide security in connection with any loan to any person/ entity in whom any of the Directors are interested, subject to:- – Passing of Special Resolution by the company in a General Meeting (Approval of at least 75% of the m embers is required). – Utilization of loans by the borrowing company shall be solely for its principal business activities

The penalty provisions a s set out under Section 185 (4) of the Act, in addition to the Company, now extends to an officer in default of the company (which includes any Director, Manager or KMP or any person in accordance with whose directions BODs are accustomed to act)

A company which has defaulted in repayment of any deposits accepted by it or in payment of interest on deposits shall not make any loan, guarantee, investments or security till such default is subsisting.