ITC in Work Contract

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This discussion clarifies the Goods and Services Tax (GST) implications for building contracts in the UK. It addresses whether a GST-registered contractor can claim Input Tax Credit (ITC) on materials purchased for a house build. The consensus is that ITC is generally not applicable in such labour and material contracts, and GST is charged at 18% on the construction value, excluding the land cost.

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(Querist)
07 August 2020 Mr X(GST registered) took a contract to build the house for Mr Y(Individual)
Mr X procures Cement etc which are taxable item.
1.Will MR X can take the ITC of all that product?
2.Rate of GST Charged to Mr Y would be 18% ?
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
07 August 2020 1 No ITC can be taken in such a case.
2 No GST applicable in case of such labour contract.
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Himanshu Agarwal

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Himanshu Agarwal (Querist)
07 August 2020 Thanks sir.
But contract to build house contain material as well as labour both..and lumpsum amount has been charged
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
07 August 2020 In such a case 18% GST applicable exclusive of land value.
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