Input Tax Credit

[YUWRAJ KOTHARI]

In case of construction contractor doing labour job and charging 18% GST requires to purchase crane for material handling in high rise bldg,so also scaffolding material and hardware material like nails, bindingwire etc. Can he claim ITC on such input.Pl enlighten and Thanks in advance.

[Rajagopalan Ranganathan]

Sir,

According to Section 17 (5) (c) of CGST Act, 2017 input tax credit shall not be available in respect of 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. Therefore you are not eligible to avail ITC on purchase of crane for material handling in high rise bldg,and also on scaffolding material and hardware material like nails, bindingwire etc.

AI Summary

Input tax credit denial for works contract services: construction-related inputs like cranes and scaffolding are generally ineligible.
Section 17(5)(c) of the CGST Act disallows input tax credit for works contract services supplied for construction of an immovable property other than plant and machinery; therefore purchases and services such as cranes for material handling, scaffolding materials, and consumable hardware used in building construction are not eligible for input tax credit unless they constitute an input service for further supply of works contract service.