ITC on purchase of commercial property( shop/Godown/offce etc.)

This query is : Resolved

Quick Summary

A GST-registered proprietor buying an under-construction commercial property may claim ITC on GST paid to the builder if used for taxable business purposes such as renting, subject to CGST Act Section 17(5) restrictions, proper documentation, and treatment in books. Clarification was sought on bifurcation of construction services.

KETAN MEHTA

KETAN MEHTA (Querist)
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05 June 2026 If a GST registered person ( proprietor) purchase a commercials property which is under construction so one needs to pay GSt to builder. Can the proprietor claim such 12% GST paid to Builder a ITC in Gst return? if the said premises intended to rent in future. and if not intended for rent then?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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05 June 2026 Whether you can claim ITC on your commercial property purchase depends on how the transaction is classified. If you use the property for taxable business activities or renting, you are generally eligible, provided the purchase does not violate Section 17(5)(d) of the CGST Act. You should ensure the GST component is not capitalized in your books and that you have a valid tax invoice. Because this area is subject to specific legal interpretations regarding construction services, verifying your contract with a tax advisor is essential.

KETAN MEHTA

KETAN MEHTA (Querist)
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05 June 2026 Property is purchased like normally with support of agreement. How should construction service be bifercated for ITC?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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15 June 2026 You may claim ITC on GST paid for a commercial property purchase if it is used for taxable business activities, provided it is not restricted by Section 17(5) of the CGST Act. Crucially, you must not capitalize the GST in your books of accounts and must possess a valid tax invoice. Given the complexity of "bifurcation" and legal interpretations, you should consult a tax professional to evaluate your specific contract before claiming the credit.

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