ITC ON CAPITAL GOODS FOR CONSTRUCTION OF BLDG

[NAMAN DOKANIA]

Can an assessee take ITC on Capital Goods used for constuction of building as well as interior furniture, if the property so construction is used for renting purposes.

1. CAse 1: Renting of Rooms like a Hotel

2. Case 2: Renting of Banquet Hall for marriage purposes.

Your opinion is highly recommended.

[Shilpi Jain]

Credit will not be eligible to the extent of capitalisation to the building. The interior furniture would generally be movable and would be capitalised under furniture and fixtures. Credit should be eligible for this as it would not fall under sec 17 restriction.

CG specifically used for construction of building would not be eligible unless you wish to follow the decision given in the case of Safari Retreats, which is now pending before the SC.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shilphi Jain.

[KASTURI SETHI]

In this scenario, ITC is not allowed.

[Himansu Sekhar]

No ITC is allowed. It is barred by sec 17(5).

AI Summary

Eligibility of ITC on Capital Goods for Building Rentals Limited by GST Section 17(5), Potential Exceptions Noted A query was raised regarding the eligibility of Input Tax Credit (ITC) on capital goods used for constructing buildings and interior furniture when the property is used for renting purposes, such as hotels or banquet halls. The consensus among respondents is that ITC is generally not allowed for capital goods used in building construction due to restrictions under section 17(5) of the GST law. However, ITC may be available for interior furniture if it is movable and not capitalized as part of the building. A specific case, Safari Retreats, which is pending before the Supreme Court, was mentioned as a potential exception.