Can Builder get input tax credit of input Goods and Services?

[CAHitesh Patel]

Please Help,

Can builder (construction of residential homes and complex) get input tax credit of input goods and services. ?? Please specify section or any description?

[Alkesh Jani]

Sir, Please refer Section 17 (c) and (d) of the CGST Act,2017, which is as under

"(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;

(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

Explanation.––For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;"

Based on above, it is clear that ITC with regards to construction of an immovable property is not available. ITC is not available on his own account although which may be used for business. However, Principal contractor can avail ITC of the tax paid by sub-contractor.

Our experts may correct me if mistaken.

Thanks

[Vamsi Krishna]

Hi

Sec 17(5)(c) mentions that ITC on construction of Immovable property is not available except where it is an input service for further supply of works contract service.

So a builder who is constructing residential homes can avail ITC on both inputs and services and has to discharge GST against the sale of the flats so constructed.

[YAGAY andSUN]

We are in agreement with Mr. Vamsi Krishna

AI Summary

Input tax credit restriction: ITC excluded for construction of immovable property except when used as input service. Statutory exclusions deny ITC for works contract services and for goods or services received for construction of immovable property (other than plant and machinery) on the taxable person's own account, including capitalised reconstruction, renovation, additions, alterations and repairs. An exception allows ITC where inputs qualify as an input service for further supply of works contract service. Practitioner responses in the document record contrasting views on whether a builder may claim ITC for construction of residential flats, and note that a principal contractor may claim credit for tax paid by a sub-contractor when conditions are met.