Understanding Section 17(5)(h) of GST Act: ITC Restrictions on Lost, Stolen, or Gifted Goods Explained

Section 17(5)(h) of the GST Act restricts Input Tax Credit (ITC) on goods that are lost, stolen, destroyed, written off, or disposed of as gifts or free samples. If ITC has been claimed for such goods, it must be reversed or added to the output tax liability in GSTR-3B. Free samples to unrelated persons are not subject to GST, but ITC must be reversed. For related persons, GST applies, and ITC is available. Goods for corporate social responsibility, customer gifts, or brand promotion do not qualify for ITC. Examples illustrate scenarios where ITC is blocked, requiring reversal if already claimed.

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