ITC to muncipalities

[Naresh Mudireddy]

Is input tax credit available to the muncipalities,

ITC:-where the muncipalities receiving services from works contractors, and receiving invoices, and paying GST to the contractors.

Out put tax:- where the muncipalities are liable to pay the taxes on road cutting charges, rent received from commercial shops, advertisement income etc....

Now can the muncipalities setoff their out put tax liability with the input they have.....?

AI Summary

Municipalities Face ITC Restrictions on Works Contractor Services Under Section 17(5) of CGST Act; Litigation Risk Noted. A query was raised regarding whether municipalities can claim input tax credit (ITC) on services received from works contractors and offset it against their output tax liabilities on services like road cutting charges and commercial rent. One response highlighted that under Section 17(5) of the CGST Act, ITC is restricted for construction services unless it's for further supply of works contract services or involves non-capitalized renovations or repairs. Another response simply stated that claiming ITC in such situations is not advisable and could lead to litigation.