ITC ON OBTAINING COMPLETION CERTIFICATE

[Sadanand Bulbule]

Dear experts

Enrty No 5 of Second Schedule to the CGST Act reads us under:

Supply of services

The following shall be treated as supply of services, namely:-

(a) XXXX

(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.

On conjoint reading of the above with explanation to Section 17[5][d], the crux of the issue that arises here is, if the part/full consideration is received prior to obtaining the Completion Certificate, but the apartments remain practically incomplete to occupy.  However the taxpayers continue the completion of such apartments even after obatining Completion Certificate, then is he entitled to utilise ITC on such balance works as well?

What would be your right advice to such taxpayers who are utilising ITC in such situation and also to the authorities who are allowing such ITC benefit?

Plz flash your validation.

AI Summary

GST on Construction Services Taxable if Payment Received Before Completion Certificate Issued; ITC Allowed Only for Taxable Supplies Under GST law, the supply of construction services for a building intended for sale is exempt from tax only if the entire consideration is received after the issuance of the Completion Certificate or first occupation, whichever is earlier. If any part of the payment is received before the Completion Certificate, the supply is taxable, allowing the taxpayer to claim input tax credit (ITC). Post-Completion Certificate construction activities generally do not qualify for ITC unless they constitute a separate taxable works contract. The Completion Certificate signifies the building's completion and cessation of taxable supply status for GST purposes. Authorities must verify the timing of payments relative to the Completion Certificate to determine ITC eligibility. Subsequent additions or repairs after the certificate may require separate approvals and are treated independently under GST, potentially allowing ITC if taxable. The principle is that exemption from GST does not confer additional rights to claim ITC beyond the statute's scope.