GST on Works Contract

[Dlip Choudhary]

GST Law mentions that input tax credit is not available for-

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

Experts view needed on the second part viz.... " except where....supply of works contract service"

[MUKUND THAKKAR]

“Works Contract” in terms of Section 2(119) means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;
except where it is an input service for further supply of works contract service

means your activity is also providing the works contaract services than you are eligible to take ITC. other wise not.

[KASTURI SETHI]

I concur with the views of Sh.Mukund Thakkar, Sir.

[KASTURI SETHI]

Sh.Mukund Thakkar Ji,

Sir, Here is one example of sub-contractor. Sub-contractor will charge GST from main-contractor for supplying WCS and main contractor will avail ITC and utilize the same for supplying the same service i.e. activities mentioned in the definition of Works Contract Service. Do you agree ?

[Ganeshan Kalyani]

A person is supplying works contract service and providing that service he is availing works contract service. Then the tax charge in inward works contract service is eligible for him to take credit. He can offset against the tax payable on outward works contract service.

AI Summary

Input tax credit for works contract services allowed when used as input for further supply of works contract services.
ITC is disallowed for works contract services for construction of immovable property except where the inward works contract service is used as an input service for further supply of works contract service; in that case the recipient supplier may claim and utilise ITC against tax on its outward works contract services, exemplified by a main contractor availing credit on GST charged by a sub-contractor.