ITC ON 5% GST with NO ITC,can weclaim itc on plant and machinery and 18% itc for hotel,Backery&restuarants

[Amrutha Jain]

A  restaurants,hotel and Backery Business coming under one GST and choosed 5% GST but not avail itc in this case can we take ITC on Plant and machinery and  18% itc on bakery production items ?

[Sadanand Bulbule]

Supply of exclusive restuarnt services at 5% GST with NO ITC; In this category you cannot claim any ITC including on plant & machinery. Refer Notofication No. 46/2017-Central Tax (Rate) dated 14/11/2017. 

However if plant & machinery is exclusively used for manufacture and supply of bakery products and sold at 18% GST, then you are eligible for ITC. Otherwise it  is also not allowed.

[Shilpi Jain]

If u have chosen 5% then no ITC.

But first chk if all can be 5%.

Another aspect is before beginning of next FY you can declare you premises as not a specified premises by filing an annexure and take benefit of paying tax @18% and claim all credits.

AI Summary

Reduced GST rate with no input tax credit bars ITC, but exclusively used manufacturing supplies may still allow credit. Election to supply under the reduced GST rate with the no ITC option bars claiming input tax credit for that activity, including plant and machinery used for restaurant services. Plant and machinery exclusively used in the separate manufacture and supply of bakery products taxable at the standard rate remain eligible for ITC. Taxpayers may reassess classification of premises or activities and, by filing the prescribed annexure before the next fiscal year, opt out of the specified reduced rate/no ITC regime to pay the standard rate and claim credits prospectively.