New GST rates impact on existing work orders

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This discussion clarifies the impact of new GST rates on existing civil construction work orders, particularly concerning input tax credit (ITC) for items like cement. Generally, ITC is blocked for goods used in constructing immovable property under Section 17(5)(d) of the CGST Act. However, if the construction specifically relates to 'plant and machinery', ITC may be claimable.

Yasmen

Yasmen (Querist)
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23 September 2025 My company (Government of India Enterprise) issued a civil construction work order (composite in nature) with 18% GST on the M/s ABC ltd , in the bill of quantity (BOQ) items cement is one of the major item of the one composite item , whether my company is eligible for any input tax credit where the GST rates cut down

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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23 September 2025 Section 17(5)(d) of the CGST Act explicitly blocks ITC for goods or services, including cement, that are used in the construction of immovable property for own use—even if these items are listed in the BOQ or are major components. The only exception is when construction pertains to "plant and machinery".
For government civil works contracts (composite nature), unless it can be established that the construction pertains to plant and machinery, or for commercial rental services, ITC on cement will not be available.

Dhirajlal Rambhia

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

Yasmen

Yasmen (Querist)
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25 September 2025 Thanks Sir,
The construction pertains to plant and machinery only.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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25 September 2025 In that case you can claim its ITC....

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