GST on inputs

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An infrastructure company developing land and providing basic facilities like sewerage and electricity, which are then used to develop plots sold as an exempt final product (land), is asking if they can claim Input Tax Credit (ITC) on the GST paid for materials like bricks, sand, and steel. The general advice is that ITC cannot be claimed on inputs used for an exempt supply, meaning the GST paid on these materials is likely irrecoverable. However, if development services were charged separately from the land itself, there might be a possibility to claim ITC, but this is unlikely if developed plots are sold as a single, exempt unit.

M (Querist)

28 February 2023 We are a infrastructure company engaged in development of land.
We are providing basic facilities like Sewerage, Water Supply, Electricity, Roads.
For these facilities- we procure Bricks, Sand, Steel & Iron (TMT Bars), Paints etc after payment
of GST
Our Final Product is Land, which is exempted ie on sale of Land , no GST shall be levied.
Can we claim ITC in inputs used for making roads, Water Tank, Road.

Please suggest

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

28 February 2023 As land is exempt from GST ITC can't be claimed on such inputs.

CA Altamush Zafar

CA Altamush Zafar (Expert)

28 February 2023 If you are charging separately for development and separately for land then possibility of claim of ITC may arise but since you are supplying developed plots as a whole it is outside the purview of GST and therefore ITC on your inputs will not be allowed.

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