ITC Real estate

[VishnuPriya R]

In case of sale of underconstruction commercial property, the GST rate is 12%. In such can ITC be availed for the construction of the particular commerical Property?.

Thanks in advance

[Sadanand Bulbule]

Dear querist

Plz refer Section 17[5][d] of the CGST Act and the ratio of Hon'ble Supreme Court's recent judgement in Safari Retreat Pvt Ltd case reported in 2024 (10) TMI 286.

[Ganeshan Kalyani]

I agree with the view of expert Sri Sadanand Bulbule Sir

[KASTURI SETHI]

A cue along with relevant case law  given by Sh.Sadanand Bulbule, Sir is more than sufficient. The query is too brief to reply in  a comprehensive manner. 

[Shilpi Jain]

Sale of underconstruction commercial property would be in the nature of a supply of a works contract service.

If that be so, then credit of the construction expenses can be claimed.

[Amit Agrawal]

I agree with Ms. Shilpi Mam!

Credit of the construction expenses can be claimed by the builder / contractor providing work contract services (& charging gst @12% thereon) by way of construction & sale of under-construction commercial property to the buyer. 

These are ex facie views of mine and the same should not be construed as professional advice / suggestion or recommendation.

[Amit Agrawal]

And IF the querist is asking about availment of ITC at the end of buyer of such commercial property (subject query is not clear, at-least to my mind), then, one should take a note the following SC ruling:

Safari Retreat Pvt Ltd case reported in 2024 (10) TMI 286

These are ex facie views of mine and the same should not be construed as professional advice / suggestion or recommendation.

AI Summary

Input tax credit entitlement for construction costs on under construction commercial sales depends on works contract characterisation and precedent.
Whether input tax credit is available for construction expenses on sale of an under construction commercial property characterised as a works contract service; builders/contractors charging GST on such supplies may claim input tax credit, while the buyer's entitlement is fact sensitive and influenced by Section 17(5)(d) CGST and the Supreme Court ruling in Safari Retreat Pvt Ltd (2024).