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Growth Meets GST: The Expectation-Reality Gap in Office Construction Constructing a new office or upgrading an existing workplace is often regarded as a significant milestone in a business's development. It signifies growth, stability, and a long-term vision. Naturally, when substantial GST is incu
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Generally, no. Section 17(5)(d) of the CGST Act, 2017, prohibits ITC on goods or services used for the construction of immovable property on your own account, even if used for business purposes.
Yes, the definition of 'construction' under Explanation 1 to Section 17(5)(d) includes reconstruction, renovation, additions, alterations, or repairs, provided the expenditure is capitalised.
Explanation 2 to Section 17(5)(d) clarifies that 'plant and machinery' must be read conjunctively. Assets like buildings and civil structures are expressly excluded from this exception, meaning ITC is blocked for them.
No, the law explicitly states that ITC is not allowed even when the construction is used in the course or furtherance of business. Business use alone does not override the prohibition in Section 17(5)(d).
If ITC is not allowed, the GST paid on construction and capitalised renovations is added to the cost of the asset. This increased cost can then be claimed for depreciation under the Income-tax Act.
GST law distinguishes between construction on your own account (where ITC is blocked) and works contracts for clients (where ITC on inward supplies is generally available). The key is who the construction is undertaken for.
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