ITC on GST Paid for install P&M

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This discussion delves into the eligibility of claiming Input Tax Credit (ITC) on GST paid for raw materials used in constructing foundations and setups for plant and machinery. While ITC is generally allowed for inputs used in constructing foundations for P&M, it's crucial to distinguish these from permanent civil structures or buildings, which are explicitly excluded. The eligibility can depend on whether the construction is capitalised and the specific nature of the foundation.

RAKESH

RAKESH (Querist)

09 October 2021 a company set up concert plant and install machinery on earth like Roader etc. after 2-3 year when project complete, such machinery move to other place and such set up like construction, dismantling.
my question is: can we take ITC on GST paid on Raw Materials purchases for such constructions set-up as a part of fixed assets set up on earth.

Udaya Chandran

Udaya Chandran (Expert)

09 October 2021 As per my opinion, you can take ITC on such inputs used for construction of foundation to supply the P&M.

RAKESH

RAKESH (Querist)

09 October 2021 please refer any case law or rule on ITC on such inputs used for construction of foundation to supply the P&M.

Udaya Chandran

Udaya Chandran (Expert)

09 October 2021 As per the Act, P&M doesn't include the following land, building and other civil structures. Accordingly if ITC taken on the materials for construction of land, building and other civil structures are not allowed. Otherwise ITC is allowed. For example, a lift is a P&M but it is installed with the help of building, so this is not eligible. Whereas a machine is installed with the support of small foundation is eligible, according to me.

A foundation is not necessarily a building or a civil structure, according to my opinion. A civil structure has no definite meaning though. It may be difficult to opine exactly.

If the ITC on such materials are not huge, you can ignore or take ITC and fight against the department in case they object the same.

Udaya Chandran

Udaya Chandran (Expert)

09 October 2021 If the construction is not capitalized, you can take ITC.

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