ITC ON FACTORY BUILDING GOODS AND LABOUR CHARGES

[SAFETAB LIFESCIENCE]

Dear Experts,

Please advise us whether we can take ITC on the following different cases

1. Investment on Factory Building on purchase of Building construction materials and booked in Fixed Assets

2. Investment on Admin Building on purchase of Building construction materials and booked in Fixed Assets A/c.

3. Investment on Factory Building on payment of Labour charges and booked in Fixed Assets A/c.

4. Investment on Admin Building on payment of Labour charges and booked in Fixed Assets A/c.

5. Expenses on Factory Building repairs on purchase of Building construction materials and booked in Building Maintenance Account (P & L account)

6. Expenses on Admin Building repairs on purchase of Building construction materials and booked in Building Maintenance Account (P & L account)

7. Expenses on Factory Building on payment of Labour charges and booked in Building Maintenance A/c.

4. Expenses on Admin Building on payment of Labour charges and booked in Building Maintenance A/c.

Experts' advise with rules or notification details and explanations are humbly solicited at the earliest time please.

[SHIVKUMAR SHARMA]

ITC not available on Sl.no.1to4 of your query & ITC can be availed on Sl. No.5 to 8.

Please refer Section 17 of CGST Act 2017.

[YAGAY and SUN]

ITC on Civil Structure is not allowed. For details, please refer Section 17(5) of the CGST Act.

[Nash Industries I Pvt Ltd]

ITC not eligible as per Section 17(5) of CGST Act. Further there is a recent Advance Ruling by Telangana on the matter.

Regards

S.Ramaswamy

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of both experts Shri Yagay and Ramasamy.

[Ganeshan Kalyani]

Reproducing extract of exclusion clause.

Sec 17(5)(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;

[Ganeshan Kalyani]

In light of the above definition it is apparent the Input tax credit on the scenarios mentioned in your query is not eligible. Thanks.

AI Summary

Input tax credit restriction on construction of immovable property disallows credit for capitalised building works; repair and maintenance credits allowed.
Input tax credit is disallowed for materials and labour used in construction, reconstruction, renovation, additions, alterations or repairs to immovable property when such costs are capitalised and booked to fixed assets; input tax credit is allowable for repair and maintenance expenditures that are charged to profit and loss and not capitalised.