INPUT CREDIT ON REPAIRS

[SURYAKANT MITHBAVKAR]

We have done repair work like painting ,Wall repairs, putting tiles, etc. in our factory gala and amount debited to repairs & Maintainnace.

Can we avail Input Credit for such transaction.

[Ganeshan Kalyani]

in my considered view, input tax credit is eligible.

[Alkesh Jani]

Sir,

If the said repairs is with regards to factory (civil structure) it falls within the ambit of Section 17(5)(d) of CGST Act,2017 and explanation given may also be taken into consideration. However, as the factory (civil structure) has been booked as capital goods, the repairs of the same shall be added to it.

Therefore, in my view ITC cannot be availed.

Thanks

[Spudarjunan S]

Dear Sir,

Eligibility of ITC in respect to reconstruction, repairs & maintenance, renovation, additions or alteration of immovable property(excluding plant & machinery) has to be determined based on the capitalization of such expenses to such immovable property.

For the purpose of capitalization requirement you need to go through AS-10 "Accounting for Fixed Assets" / IND AS - 16 "Property Plant and Equipment".

ITC in respect of such expenses i.e.reconstruction, repairs & maintenance, renovation, additions or alteration of Immovable Property(other than Plant & Machinery):-

1. If capitalised to such immovable property - ITC is ineligible under section 17(5)(c)/(d) of CGST Act,2017.

2. If not capitalised to such immovable property - ITC is eligible.

[Ganeshan Kalyani]

Sri Alkesh Ji, the repair to the capitalised asset not necessarily capitalised . If the benefit out of the repair is not spread over the year then it is becomes a revenue expenditure. In such cases credit is eligible as specifically provided in section 17 (5) of the CGST Act. Thanks.

[Ganeshan Kalyani]

As reagard capitalisation of an asset INDAS need to referred.

[KASTURI SETHI]

How this decision is in favour of the assessee ? That is to be analysed.

2018 (17) G.S.T.L. 690 (A.A.R. - GST)  = 2018 (9) TMI 1644 - AUTHORITY FOR ADVANCE RULING, MADHYA PRADESHIN RE : JABALPUR ENTERTAINMENT COMPLEXES P. LTD.

 

 

[Ganeshan Kalyani]

Section 7(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;

The explanation given in the Act states that input tax credit is eligible if not capitalised in the books of accounts.

AI Summary

Input tax credit on repairs depends on whether repair costs are capitalised; non capitalised repairs may attract credit.
Input tax credit on repairs to immovable property (other than plant and machinery) is disallowed to the extent such repair costs are capitalised to the asset; if those repair costs are treated as revenue expenditure and not capitalised, input tax credit remains available. The same principle applies to works contract services, and accounting standards on fixed assets guide the capitalisation determination.