Anomaly check
Blocked credits under Section 17(5)
Credit that was never available, claimed by mistake and reversed later with interest. This is the single most common avoidable reversal in a purchase register.
Sec. 17(5), CGST Act 2017
Law current as of 21 September 2026
What Section 17(5) blocks
- Motor vehicles for passenger transport (with narrow exceptions), and their insurance, repair and maintenance.
- Food and beverages, outdoor catering, beauty treatment, health services, club and fitness memberships.
- Works contract services and goods or services used for construction of immovable property on own account.
- Goods or services used for personal consumption, and goods lost, stolen, destroyed, written off or given as free samples.
- Travel benefits extended to employees on leave.
Why it slips through
- The invoice is a perfectly valid tax invoice and appears in GSTR-2B, so a 2B-versus-books match shows no mismatch at all. Nothing is wrong with the document — the credit is simply not available. Blocked credit is invisible to reconciliation and only shows up when someone reads the expense head.
- It also tends to sit in accounts that look ordinary: vehicle running expenses, staff welfare, office renovation, client entertainment.
What to do when you find it
- Reverse the credit in Table 4(B) of GSTR-3B for the period, with interest under Sec. 50 where it has already been utilised.
- Fix the expense head so the same entry does not create the same claim next month.
- Record the reversal in the ITC register with the clause, so the position is defensible if it is asked about later.
Test this on a real register
Upload a sales or purchase file in the free simulator — no sign-up — and see every finding with the clause it breaches and the rupee impact. In the signed-in workspace, firm owners and admins can reconcile the books and use the approved figures to prepare and file GSTR-1 or GSTR-3B by EVC.