ITC on common services

[Kaustubh Karandikar]

The registered premises of XYZ is partly used by PQR. XYZ is issuing a service invoice for the rent charged to PQR for using this premises. Certain services received by XYZ are common in nature i.e. used by XYZ as well as by PQR. Can XYZ claim full ITC of the same or to the extent of used by PQR, XYZ need to reverse the ITC? As per my understanding, since XYZ is charging GST to PQR for the rent charged, XYZ is eligible to claim full ITC. Please confirm?

AI Summary

XYZ Must Reverse Proportional ITC for Shared Services with PQR Due to Section 17(2) GST Rules XYZ cannot claim full Input Tax Credit (ITC) on common services used by both XYZ and PQR. Although XYZ charges GST to PQR for rent, the ITC must be proportionately reversed to the extent of usage by PQR. The full ITC is not permissible as the services are shared, and the portion attributable to PQR's use must be accounted for separately.