Guides · GST
Blocked credits under GST, explained
Blocked credits are purchases on which GST does not allow input tax credit, even though the business paid the tax. Knowing the broad categories keeps a business from claiming credit it will later have to give back.
Why some credits are blocked
Input tax credit is meant for tax on inputs used in the course of business. GST blocks credit on a defined list of purchases that are treated as final consumption or as prone to misuse, regardless of how they are used.
Claiming credit on a blocked item is a common error that surfaces in reconciliation or assessment and then has to be reversed.
Broad categories to watch
The blocked list broadly covers items like certain motor vehicles, some works-contract and construction inputs, goods and services for personal consumption, and a few specified supplies. The exact scope has conditions and exceptions.
Because the list has nuance, treat any purchase that feels like personal use, a vehicle, or construction as one to confirm before claiming credit.
How Lekha helps
Lekha records each purchase with its tax and its source document, so the input side of the ledger is complete when a business or its accountant decides which credits are eligible.
Lekha records what your documents say and tracks the money on both sides — what you owe and what you are owed. It records and tracks; it does not replace your accountant.
Questions
- What are blocked credits?
- They are purchases on which GST does not allow input tax credit, even though tax was paid, such as certain motor vehicles and goods or services for personal use.
- Can I claim credit on anything my business buys?
- Most business purchases qualify, but a defined list is blocked. Confirm any purchase that looks like personal use, a vehicle, or construction before claiming credit.
- What happens if I claim a blocked credit by mistake?
- It typically has to be reversed, which increases the tax owed for that period. Keeping accurate purchase records makes such items easier to catch early.
This guide is general information, not legal or tax advice. Confirm the current rules and your own circumstances for any specific case.