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Availability of input credit for builders in work contract


Sunil (CA)     16 June 2017

Sunil
CA 
 15 likes  185 points

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A builder / developer is employing various contractors for construction of immovable properties (falt/villa). As per section 17(5)  of CGST Act, input credit is not available on works contract service when supplied for construction of an immovable property, except where it is an input service for further supply of works contract service.

Can the services on Construction of building, complex etc can be avail input credit on Work contract service? The rate of works contract (18%) and construction of building complex etc (12% if land included) is different.

Is there any clarification given in this regard?

Can anyone advise on the above.

avater

Dhirajlal Rambhia (KVO Merau Kutchh)     17 June 2017

Dhirajlal Rambhia
KVO Merau Kutchh 
 9230 likes  93355 points

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For detailed analysis refer: https://tax guru.in/goods-and-service-tax/key-tax-impact-real-estate-works-contract-service-gst-illustration.H T M L

Sunil (CA)     07 July 2017

Sunil
CA 
 15 likes  185 points

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Sir, there is no answer for my above query. Also the article is based on the old rates in the article. The rate for construction service is fixed at 18% with a deduction of 1/3 of the total value towards land.

I feel the explanation to the section 17(5) clears that the same is  unavailability of input credit will be applicable only in case the immovable property  is capitalised.

 


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