GST SECTION 17(5)

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This discussion clarifies input tax credit (ITC) eligibility under GST Section 17(5) for construction materials like cement, iron, and paint. If your client is a works contractor and charged GST on their services, ITC is generally available. However, if the construction is capitalised and not part of a 'plant', ITC might be blocked. Recent Supreme Court rulings, such as the Safari Retreats case, suggest ITC may be claimable if the building itself constitutes a 'plant'.

S. RAVICHANDRAN

S. RAVICHANDRAN (Querist)
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13 December 2024 One of our client engaged civil construction activites of plant, he received notice for input tax availed for Cement, Iron and Paint items u/s 17(5) ineligible ITC. The major inputs for construction activities is Cement, Iron and Paint. Kindly give any notiification/circulars to reply.

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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13 December 2024 You have not specified whether you are a works contractor or not, if yes ITC is available. Otherwise it is blocked under section 17(5) to the extent it is capitalised in the books. However you may also refer to recent SC judgement in the case of safari retreats, according to which if your building constitutes plant you may be eligible for ITC.

S. RAVICHANDRAN

S. RAVICHANDRAN (Querist)
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13 December 2024 Works Contractor. Charged GST @ 18% on taxable value in the invoices to the customers.

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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16 December 2024 If you are a works contractor and undertook construction activities for their clients, then ITC is available.

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