Availment of ITC

[Prudhvi Jakkula]

Dear experts,

I have some queries in sec 17(5).

Sec 17(5)(d) reads as below

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;

Here my doubt is, it is clearly said that credit relating to construction is immovable property is not eligible. Then why real estate people are claiming credit of ITC paid by them on flats sold before completion certificate.

But if immovable property is constructed for letting out purposes then the same ITC is not available for the business.

Please clarify this. (In recent judgement of high court it was said that credit on immovable property which was used for letting out can also be claimed) 2019 (5) TMI 1278 - ORISSA HIGH COURT

So i request the members to put forward some valid points regarding this.

AI Summary

Discussion on ITC Eligibility Under Section 17(5) GST Act for Construction of Immovable Property Sparks Debate A forum participant raised a query about the availment of Input Tax Credit (ITC) under Section 17(5) of the GST Act, specifically concerning immovable property construction. The discussion involved clarifications on whether ITC can be claimed for properties constructed for business purposes or for sale before completion certificates are issued. Several experts, including KASTURI SETHI and SHARAD ANADA, contributed, highlighting the distinction between construction services and works contract services, and the interpretation of 'on his own account.' The debate referenced a recent Orissa High Court judgment, with participants suggesting that the matter might escalate to the Supreme Court for further clarification.