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On 8 October 2026, the 57th GST Council recommended amending Section 17(5) of the Central Goods and Services Tax Act, 2017, which governs blocked input tax credit (ITC). The recommendation names several categories that could receive relief, but the announcement does not give the final legal wording or an effective date. It should not be treated as confirmation that the credits are currently claimable.
What the Council recommended
The official GST Council meeting release says: “The Council recommended amendment in section 17(5) of the CGST Act, 2017”. The Council described the aim as rationalizing blocked ITC, reducing cascading taxes, and ensuring a smoother flow of credit across the supply chain.
The release introduces its examples with “inter-alia,” meaning the named categories are examples and may not be an exhaustive list. The recommendation covers both services and goods-related situations:
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- Services: outdoor catering, health insurance, and life insurance.
- Infrastructure: telecommunication towers and pipelines laid outside factory premises.
- Goods and inventory: free samples, and goods destroyed or written off on expiry of shelf life as required by law.
The release does not specify the conditions, limits, or documentation that would apply to any of these categories under an amended provision.
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What this means for businesses now
A Council recommendation is not, by itself, the final statutory amendment. The 8 October release does not state that the change has taken effect, provide the amended clause text, or give an effective date. Businesses should therefore not change ITC claims solely on the basis of this announcement.
Before relying on relief, taxpayers need to check the enacted amendment and any applicable government implementation guidance. Those materials would establish the final scope, conditions, timing, and any transitional treatment.
Does this proposal change ITC on business cars?
The 2026 release does not name business cars or establish general ITC relief for them. Earlier GST Council agenda material describes the existing Section 17(5)(a) restriction for passenger motor vehicles with approved seating capacity of up to 13 persons, including the driver, subject to exceptions for further supply, passenger transport, and driver training. That historical context does not determine the scope of the 2026 recommendation. See the 54th GST Council meeting agenda material.
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The announcement does not establish whether the recommendation has since been enacted, nor does it supply the final amendment text, an effective date, category-specific limits, or transitional rules. Those details must be confirmed through a later official Gazette notification, an amendment to the CGST Act, or applicable government guidance before determining eligibility.
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