57th GST Council Recommendations on Blocked Credit under Section 17(5): Scope, Legal Effect and Interim Position

This article sets out the recommendations of the 57th GST Council, which met on 8 October 2026 at Bharat Mandapam, New Delhi under the chairmanship of the Union Finance Minister, to rationalise the blocked credit provisions of Section 17(5) of the CGST Act, 2017, and explains what an assessee may and may not do until the law changes.

Blocked credit is a recurring source of disputes and of cost for businesses. Recommendations of this kind are frequently reported as if they had already taken effect, so the practitioner's first task is to separate what has been recommended from what is operative.

Q&A on the recommendations

1. What does Section 17(5) do today

Section 17(5) opens with the words "Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18". It lists goods and services on which input tax credit is not available even if they are used in the course or furtherance of business. Because of the non-obstante opening, the conditions for eligibility in Section 16(1) and the opening-stock and conversion provisions in Section 18(1) do not rescue a credit that falls within the list.

Seven items are covered.