ITC claim on rented building

[KALLESHAMURTHY MURTHY K.N.]

“ Xyz” is a manufacturer and supplier registered in Chennai and Karnataka under GST. All supplies are effected from Chennai only. He has a rented building in Karnataka for assembling and meeting of the members and distributors to promote business. The Building owner is a registered person in Karnataka and issues tax invoices collecting CGST & SGST. Is “ Xyz“ eligible to avail and utilise ITC on building rent paid?

AI Summary

ITC Eligibility for Rent: Challenges with Place of Supply Rules for Chennai Business under Section 16 of CGST Act. A manufacturer and supplier registered under GST in Chennai and Karnataka inquires about eligibility for Input Tax Credit (ITC) on rent paid for a building in Karnataka used for business meetings. The building owner, registered in Karnataka, charges CGST and SGST. Experts discuss eligibility under Section 16 of the CGST Act, emphasizing that ITC is available if goods or services are used in business furtherance. However, due to place of supply rules, ITC may not be claimable by the Chennai registration. Suggestions include billing between distinct entities (Karnataka to Chennai) to utilize ITC, though concerns about legality and departmental scrutiny arise.