Club Membership and Employee explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Two sub-clauses, one line each, no internal exceptions. What they cover is clear; what they do not cover is where the value is.
(b)(ii) blocks credit on membership of a club, health and fitness centre. (b)(iii) blocks travel benefits extended to employees on vacation such as leave or home travel concession. Neither has its own exception. Both are reached by the obligatory-under-law proviso at the end of clause (b) — which almost never applies to either. But (b)(iii) is limited to vacation travel, so ordinary business travel is entirely outside the clause.
Clause (b)(ii): membership of a club, health and fitness centre
The block is on membership, not on everything a club supplies.
Blocked:
- corporate club memberships;
- gym and fitness centre memberships for employees;
- sports club and recreation club subscriptions;
- annual membership fees of a social club.
Arguably outside the clause:
- charges for facilities used at a club that are not membership — a conference room hired at a club for a business meeting, banqueting for a customer event. What is blocked is membership, and a room hire invoice is not a membership fee. The counter-argument is that food and beverages served there are separately blocked under (b)(i), which is usually the more relevant restriction anyway.
- professional body subscriptions. The Institute of Chartered Accountants of India, a bar council, an industry association, a chamber of commerce. These are not a "club, health and fitness centre" in the ordinary sense — they are professional or trade bodies. Credit on such subscriptions is generally taken, and the position is defensible on the plain meaning of "club".
Clause (b)(iii): travel benefits on vacation
"travel benefits extended to employees on vacation such as leave or home travel concession"
Three limiting words: "on vacation".
Blocked:
- leave travel concession and leave travel allowance arrangements where the employer books the travel;
- home travel concession;
- a family holiday funded by the employer;
- an incentive trip for employees, framed as a reward rather than a business activity.
Not blocked — outside the clause entirely:
- business travel — flights, hotels, taxis for work;
- relocation travel on transfer or new joining;
- travel to a training programme or a conference;
- client-facing travel;
- travel by directors on company business.
That last group is the important one. Ordinary corporate travel spend is not blocked by clause (b)(iii). It may be restricted by other clauses — hotel accommodation is not blocked at all, but meals on the bill are blocked under (b)(i), and cab hire may be blocked under the vehicle-hire limb — but the travel itself is creditable.
The practical consequence: a travel expense policy should distinguish vacation travel from business travel at source, because the two produce opposite credit outcomes and both arrive on the same corporate card statement.
An incentive trip: which side of the line?
The hardest case. A company takes its top salespeople to a resort for four days, with two half-day business sessions and the rest recreational.
Arguments for blocked: the substance is a reward, the recipients are on leave, and the business content is nominal.
Arguments for not blocked: there is a genuine business purpose — a sales conference, a strategy session — and the travel was not "on vacation".
What decides it in practice is the documentation: the agenda, the attendance record, whether attendance was compulsory, whether leave was applied for, and whether the event was described internally as a reward or a business meeting.
Where the position is taken that the trip is business travel, the file must support it contemporaneously.
The proviso, and why it rarely helps here
The obligatory-under-law proviso applies to both sub-clauses. But there is no statute compelling an employer to provide a club membership or a vacation travel benefit to its employees.
Leave travel concession is a tax-favoured allowance under the Income-tax Act, not an obligation. Being tax-efficient is not being obligatory.
So in practice both sub-clauses operate as absolute blocks. The obligatory-under-law proviso →
Key takeaways
- (b)(ii) blocks membership of a club, health and fitness centre — the membership fee, not every club invoice.
- Professional body and trade association subscriptions are arguably outside "club".
- (b)(iii) blocks travel benefits extended to employees on vacation.
- Business travel is entirely outside clause (b)(iii).
- The obligatory-under-law proviso applies but almost never bites for these two.
- Incentive trips turn on contemporaneous documentation of business purpose.
Read next
- Food, Beverages and Outdoor Catering
- The "Obligatory Under Any Law" Proviso
- Leasing, Renting and Hiring of Motor Vehicles
- Blocked ITC Under Section 17(5)
Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act as amended to 31 March 2026 (ICAI Bare Law, 12th edition) and the ICAI Handbook on Blocked Credit under GST (November 2025).