ITC availability to work contractor

[KARAN VERMA]

Sir, i am work contractor providing work contract services in relation to construction of immovable property and raise tax invoice by charging 18% GST to recipient of service.

My question is whether i am eligible to take ITC on purchase of cement, steel and other building construction items which are used for providing work contract services by me.

Kindly clarify this.

[Himansu Sekhar]

Yes you can

[PAWAN KUMAR]

dear sir,

as per clause (d) section 17 (5)CGST Act, ITC is not claimable on goods/services used for construction of immovable property subject to capitalization in the books. since you are the works contract service provider and goods purchased by you are using in the works contract service, you are not capitalizing the said goods, ITC is eligible for you on goods purchased. even you may also claim itc on sub-contract of works contract service as input service.

[KARAN VERMA]

Thank you sir. Now, i need clarification for one more point.

Can recipient to whom work contract services provide avail ITC on work contractor invoice, if recipient is builder and he further let out such building/shops on lease rent @ 18% GST.

[Himansu Sekhar]

No, the buidling is constructed in his own account.

[Ganeshan Kalyani]

The query in the sequence 3 is not eligible for credit.

[PAWAN KUMAR]

Dear Sir,

It is under exclusion clause 17(5)(c) of CGST Act. Works contract service, ITC is not admissible.

AI Summary

Input tax credit eligibility: contractors may claim ITC on construction materials; owners constructing for own account cannot. Work contract service providers can claim input tax credit on construction materials used in supplying works contract services when those materials are not capitalised in the provider's books; conversely, a recipient who commissions construction of immovable property for own account (such as a builder constructing to let) is not eligible to claim input tax credit for that construction service under the immovable-property exclusion.