Credit of gst on interior designing, architect fees

Page no : 2

Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 04 April 2019

Nishant,

Check section clearly. It covers works contract (not as issue here) AS WELL AS goods/services used FOR construction (see meaning under explanation) of immovable property.

Upgrade to CAclubindia Pro. Subscribe Now!

Nishant shah (AUDIT ASSISTANT) (302 Points)
Replied 04 April 2019

One view of expert is produced below:

I request our experts to re-comment, after perusing the submission made under:-

First let me reproduce the definition of work contract as given in Section 2 of CGST, Act, 2017 “(119) “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract”

From above it can be said that works contract is limited only to construction of civil structure, once the civil structure is complete by way NOC or any other completion certificate issued by proper authority, services is said to be completed. However, interior designing takes place after the construction services is completed and interior designing services constitute mainly designing works, which falls under separate HSN code than of construction service. Only the cost of civil structure and material used for execution of civil structure, may be captalised and ITC of the same cannot be availed, in terms of Section 17(5)(d). In GST regime, under Section 17, the goods and services which are not eligible for ITC has been specifically mentioned e.g. health care, insurance, outdoor catering etc. non mention of interior designing amounts to eligible for ITC.

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 04 April 2019

Though Section 17(5)(d) restricts ITC on goods or services supplied for construction of Immovable Properry , But Explanation to clause (d) of section 17(5) provides that the purpose of clause (c) & (d) , the expression "construction ". includes re-construction, renovation, or alteration or repair , to extent of capitalisation to the said immovable property . Hence if the value of services (Architect) is capitalised to Immovable property then No ITC is available but if its being book as revenue expenditures then ITC can be claim. In my view such expenses is to be capitalized to Building Account & ITC is not available. Yes if its rental building & tenant from his pocket doing some construction work then in that case the such expenditure will not be capitalised and ITC will be available

CA Himanshu Gandotra (Chartered Accountant) (1160 Points)
Replied 04 April 2019

Sir you are Exactly right...the whole game is about capitalisation as per explanation in the section....if capitalised then only itc will be blocked...

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 04 April 2019

The professional services provided by Architect is related to Immovable Property for Recepient , hence must be capitalised & ITC is not available.

Upgrade to CAclubindia Pro. Subscribe Now!

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 04 April 2019

& There arw many expenses which are done After construction , (Painting, fall ceiling etc) but if it is capitalised then no ITC is available.

Nishant shah (AUDIT ASSISTANT) (302 Points)
Replied 06 April 2019

Originally posted by : Pankaj Rawat
	The professional services provided by Architect is related to Immovable Property for Recepient , hence must be capitalised & ITC is not available. Sir, if I want to take ITC, can't i claim considering it as revenue?