ITC eligibility on works contract depends on capitalisation versus revenue treatment; capitalisation disallows credit for immovable property.
Eligibility for Input Tax Credit on works contract and construction depends on whether the activity concerns immovable property, whether it qualifies as a works contract or construction, and whether the expenditure is capitalised. ITC is disallowed where works or construction relate to immovable property and costs are capitalised; ITC is available when costs are charged to revenue or when the activity relates to plant and machinery excluded from the immovable-property restriction. (AI Summary)