Gst credit

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shwetha (Querist)
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01 July 2018 Dear experts,

Our clients were into commercial training and coaching, in order to set up branches they used to get building on rented basis on certain terms and aggrements for 1,2,5,or10yrs based on their needs.

My question is in order to start and run business, they used to set up or make renovation of rented premises in order to start classes it includes partition works etc. Basically works contract.

Can GST credit claim on Such partition works??
Without such expenditure they cannot start their business itself.
Few says it's of works contract credit not allowed.
Somebody suggest.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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01 July 2018 Please read section 17(5) of CGST Act 2017 very carefully. ITC not allowed for "works contract services when supplied for construction of immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service". In your case it is not construction of immovable property but only renovation. Therefore in my view you can claim ITC.

Vishakha Kejriwal.

Vishakha Kejriwal. (Expert)
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02 July 2018 For the purposes of the said clause as referred by Mr.Gupta construction has been defined to include renovation by virtue of an Explanation in Section 17(5) and hence ITC shall not be allowed.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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10 July 2018 The expression “construction” includes reconstruction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;

So if the said property is shown as your fixed assets and the renovation/repair/alteration part is capitalised then no ITC can be claimed. In the instant case it is a rented building and the renovation will be your revenue expendture. Therefore in my view you can claim ITC.

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