ITC on construction of warehouse

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Nagaraj (Querist)
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21 August 2025 Hi ,

Can we claim ITC on Construction of warehouse such as cement, steel and other materials? after the construction is completed warehouse will be let out for Rent and GST will be collected on the same.
Considering the supreme court decision on Safari Retreat case whether ITC is eligble to claim and set off against future tax liability on rent collected from warehouse let out

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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21 August 2025 If you construct a warehouse for letting out, collect GST on rental, and the warehouse is used specifically for that taxable rental supply, ITC on inputs (cement, steel, etc.) is eligible to be claimed and set off against future GST liabilities on rent collected.

If the warehouse construction is for own use or expenses are fully capitalized for purposes not directly linked to taxable supply, ITC may be restricted per Section 17(5)(d).

If there’s any ambiguity about “immovable property” vs “plant and machinery,” refer to the Supreme Court's principle and ensure your documentation backs up the business use for taxable rent.

In conclusion, based on Supreme Court judgment and current legal interpretations, ITC is eligible for warehouses constructed to be let out with GST rental supplied, subject to correct documentation and primary business use for taxable output. If denied by tax authorities, strong grounds exist to contest it, per Safari Retreats precedent.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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22 September 2025 Good luck..

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