06 October 2017
Dear All I have been looking for an answer as to whether section 17(5)(c) bars the credit when works contract service are supplied for construction of an immovable property. The language of the section apparently bars such ITC except when such works contract service is input service for further supply of works contract service. Therefore, it appears that the builders who are building or getting constructed buildings which are obviously, immovable properties, would not be eligible for ITC. I have not received any mature response so far. I have also written an article which is published and can be seen at https://www.caclubindia.com › Articles › GST. The heading of the article is 'Construction service and ITC'. I request the experts to read the section and my article and then give the opinion. My view is that the ITC is not admissible to the builders in view of the language used in section 17(5)(c). However, most of the people in trade and also the Revenue officers feel that the ITC is admissible. I admit the policy of the govt. is to allow ITC but i feel the language of the section is not supporting the intention of the govt. Pl give your views
06 October 2017
No need of confusion you interpret this way. For the builders he is buying building materials and engages labour contractor and pay GST. All these are input service for further supply of works contract service hence he is eligible for input credit on GST paid. Builder is collecting GST from buyers of home under works contract service only as the house is under construction(construction agreement entered and sale deed for common area) ITC can be claimed on inputs.. GST not applicable on Sale of completed flats on this builder will not be able to claim ITC.
10 October 2017
It is surprising that experts are not responding on this important issue. Pl respond so that a discussion can take place and perhaps some conclusion can also be arrived. I repeat pl read each word of section 17(5)(c) before responding.
CAclubindia
