GST Credit of Input tax paid on Furniture and fixture.
As per section 16 of CGST Act, Every registered person is entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business.
Credits of Input tax paid on capital goods are also available.
However as per section 17(5) there are certain cases where either credit of input tax is not available or available with some restrictions. So in order to see whether credit of input tax in any particular situation is available or not, one should keep in mind general principal of section 16 as well as section 17 of the CGST Act.
Out of many situations one situation is as under:
Situation: In case of Hotel, Whether credit of GST used in furniture and building construction is available or not ?
As per section 17 (5) of CGST Act.
Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely: -
(c) ITC on Works contract services when supplied for construction of immovable property, other than plant and machinery available only if it is for further supply of works contract service.
(d) ITC is not available on Goods or services received by a taxable person for construction of an immovable property on his own account, other than plant and machinery, even though it is used in course or furtherance of business.
Explanation.- For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property;
Meaning of plant and machinery Credit of tax paid on goods and services used for construction of immovable property including work contract service has been allowed only if such immovable property is in the nature of plant and machinery.
The expression 'plant and machinery' has been defined through explanation in Chapter V of the CGST Act to mean apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes –
- Land, building or any other civil structures;
- Telecommunication towers; and
- Pipelines laid outside the factory premises.
In view of the above provisions credit of capital goods in the nature of movable goods and services used to prepare it is available. However credit of capital goods in the nature of immovable goods is only available if it is part of plant and machinery. Hence input credit of Furniture in the nature of movable goods should be available. But input credit of building and furniture not in the nature of movable properties should not be available. It will not be considered as plant and machinery.