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ITC on building construction goods and services

harinder (Sr. Excutive-Finance and accounts) (53 Points)

02 March 2024

Dear Sir,
I have doubt if we purchase a land and then do the full construction on it and after completion of full construction, we will rent out that building to another company...
My question can we eligible to take full itc on purchase of goods and services for this complete construction activities....

I also know that one similar case is still pending in ho'able supreme Court in case of safari retreats pvt Ltd vs orissa high court....

Note: we will use this building only rent out purpose and gst will be charged on renting income @ 18℅.

Note: Registry has been done in favor of company name only..

Thanks in advance
Best Regards
Harinder Kumar

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9 Replies

sabyasachi mukherjee (27568 Points)
Replied 02 March 2024

Input tax on construction of building can be used only when used for the purpose of business

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CA Rashmi Gandhi (Chartered Accountant) (86323 Points)
Replied 02 March 2024

Even you use such building for renting purpose , no ITC will be available. ITC is specifically blocked u/s 17(5).

However you can fight for it in the hight court and appeal if any unfavourable order issued by the department.

sabyasachi mukherjee (27568 Points)
Replied 03 March 2024

No it's not included in sec 17(5)

CA Rashmi Gandhi (Chartered Accountant) (86323 Points)
Replied 04 March 2024

So where it is included..

CA Altamush Zafar (GST Consultant) (15971 Points)
Replied 04 March 2024

As you said there is a favourable judgement by the Orissa HC in the case of safari retreats, however the same is still pending in the Supreme Court.
As such the law itself is not favorable.
Take a professional opinion on the same before either taking or lapsing ITC.

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Kishor Lulla (993 Points)
Replied 04 March 2024

Claim ITC but don't utilise it. If s c decides in our favour , we will get it. I m doing this planning in my clients cases. lullakishor @ gmail.com

chethan data (298 Points)
Replied 04 March 2024

As a sir said u can claim it ITC first but do not untilize when ever once supreme court given judgement in favour of assesee then u can utilise the ITC in case judgment against assesee just u should reverse ITC
Without utilise ITC no interest leveid

JOJY THOMAS (CHARTERED ACCOUNTANT) (295 Points)
Replied 05 March 2024

As per the Section 17 (5) of CGST Act ,the Input tax credit shall not be available on the goods and services, or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. Hence even if you have a taxable supply after the completion of Construction, You will not get the ITC on construction of an immovable property

CS Advocate Abhishek Goyal (M Com FCS LLB M-AIMA ) (13704 Points)
Replied 07 March 2024

See claiming ITC and not utilizing it for set off purposes is fine until decision of honorable SC comes. But the problem with this option is penalty under section 73 or 74 can be attracted by the department as under these actions penalty gets attracted even if ITC is only availed and not utilized.