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Sec 17(5)(h) — goods LOST, STOLEN, DESTROYED, written off, or DISPOSED of by way of gift or free samples:
AITC is blocked — taxpayer must reverse credit on such goods
BITC fully available
CITC available on free samples only
DITC available on theft only
Answer & Solution
Correct answer: A. ITC is blocked — taxpayer must reverse credit on such goods
1. Sec 17(5)(h) blocks ITC on goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.
2. If ITC was already taken, it must be reversed.
3. This prevents the credit chain from leaking through non-supply outflows.
_Source: ICAI BoS CA Final Paper 8, Ch 6 "Input Tax Credit", §Sec 17(5)(h)_
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