Installation of rain water storage pit

[S.C. WADHWA]

Dear Expert,

We are manufacturers of both taxable and exempted food items.

We have installed two pits for rain water storage purpose inside the factory under the requirement of Haryana ground water Act. My query is whether we will get input tax credit full or in proportionate. Pit will be capatalized in the books. Please give your expert opinion.

REGARDS,

WADHWA

[Padmanathan KV]

Since rain water storage pit is an immovable property (other than plant and machinery), it will be blocked under the following entry:

(c) 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;

(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

This is regardless of whether it is obligatory under any law or not as such exception is only applicable for sub-clauses up to (b).

Therefore in my opinion, no input tax credit may be available.

AI Summary

Input Tax Credit Denied for Rainwater Storage Pits: Classified as Immovable Property Under GST Rules. A manufacturer of taxable and exempted food items inquired about the eligibility for input tax credit on rainwater storage pits installed under the Haryana Ground Water Act. The pits, capitalized in the company's books, are considered immovable property. An expert responded that input tax credit is likely not available because the pits are classified as immovable property, not as plant or machinery. This classification blocks input tax credit under the GST rules for construction of immovable property, irrespective of legal obligations.