ITC - Construction of Immovable Property and Works Contract

ITC Disallowed on Capitalized Immovable Property Except Plant and Machinery Under GST Section 17(5)

Input tax credit (ITC) is disallowed under GST for works contract services and goods or services used in constructing immovable property, other than plant and machinery, when such property is capitalized in the books of accounts. This includes construction, reconstruction, renovation, additions, alterations, or repairs to the extent of capitalization. ITC is available if the immovable property is plant and machinery or if the goods or services are used for further supply of works contract services. The term 'plant and machinery' excludes land, buildings, civil structures, telecommunication towers, and pipelines outside factory premises. ITC is blocked only when the property is immovable, capitalized, and not plant or machinery. Conversely, ITC is allowed for movable property, plant and machinery, or when goods and services are used for revenue expenses.