AVAILING OF INPUT TAX CREDIT

[DR.MARIAPPAN GOVINDARAJAN]

One trust section 8 company is running nearly 10 schools. They also rented shops to the vendors. They are collecting GST on rental charges. The services rendered to the students are exempted from GST. They collect rent along with GST and paid the same to the department. The question here is as to whether the trust can avail input tax credit paid for the maintenance or other expenses for the rented buildings/

[Shilpi Jain]

When the outward supply (renting) is taxable, GST paid on related expenses (maintenance, etc.) will be eligible.

Why is there a doubt in this regard?

[DR.MARIAPPAN GOVINDARAJAN]

The trust has not availed input tax credit till time. They are in the hope that since they are exempted from GST they are not eligible to avail ITC. For confirmation I raised this query. Thank you ma'am.

[Sadanand Bulbule]

Dear Sir

I agree with the view of Madam Shilpi ji. The following explanation to Section 17 [5][c] & [d] of the GST Act plays crucial role in deciding the entitlement of ITC used for furtherance of a business by a taxable person as long as the immovable property is not capitalised in the books of accounts.

Explanation.––For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;

AI Summary

Trust Can Claim ITC on Maintenance for Taxable Rental Properties Despite GST-Exempt Educational Services Under GST Act Provisions. A trust operating schools and renting shops is collecting GST on rental charges, but its educational services are GST-exempt. The trust inquired whether it can claim input tax credit (ITC) for maintenance expenses on rented properties. One respondent affirmed that since renting is a taxable supply, the trust can claim ITC on related expenses. Another respondent clarified that the trust hadn't claimed ITC due to its GST exemption status for educational services, seeking confirmation. A third respondent agreed, citing GST Act provisions that allow ITC for business-related expenses unless the property is capitalized in accounting records.