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ITC claim on purchase bills.. under works contract

01 July 2018

Under works contract ...

A person enters into contract to construct Building/apartment/house
Not intension to sell ...

He needs to pay 18% GST....

Further...
He can avail input (ITC) on purchase bills (Cement/iron/sanitary hardware)....Bills.....
.....?

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6 Replies

Ravi SADhiyan (Practice) (4510 Points)
Replied 01 July 2018

Originally posted by : Chisty Mohammad
	Under works contract ...A person enters into contract to construct Building/apartment/house Not intension to sell ...He needs to pay 18% GST....Further...He can avail input (ITC) on purchase bills (Cement/iron/sanitary hardware)....Bills..........?

If Building for personal use than No ITC

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Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 01 July 2018

No he cannot claim ITC as block under section 17 (5),.. yes But if he builder, construction co. can avail ITC

Chisty Mohammad (36 Points)
Replied 01 July 2018

Builder is a civil engineer and it was a firm (PAN is on firm name)....then he can avail ITC on purchase bills ..?

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 01 July 2018

Dear Christy
The concept is the End User cannot Take ITC (not supplying further)

ITC for works contract can be availed only by one who is in the same line of business and is using such services received for further supply of works contract service.

Lets take Eg.

CA is building his office in that case the CA cant avail the ITC on work contract services, but at same time the work contractor who is providng services to CA is entitled take ITC in his Inward supplies.

Chisty Mohammad (36 Points)
Replied 01 July 2018

in your example end user is CA
but mine client is only construction part...

contractor agrees to construct Building office for CA for 20 lakhs.
let say ( 17L = Taxable + 3L = GST)

now CA paid final amount.

now contractor details..

cement = 2 lakhs
iron = 2 l
steel = 2l
labour = 10l
total work cost is = 16l(2+2+2+10)
remain 4l is contractor margin...ok

now my point is...
he paid 2 lakhs GST Tax out of 6 lakhs purchase
( taxable = 4L + GST =2L)

now
output tax is 3L
input tax is 2L
net payable is 1L (3L-2L).

correct me if am wrong...

thanx in advance