GST ITC on Construction/ Tenant Specific Renovation of Rental Property

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Abhay A

24 Points Posted on 19 September 2026

I have a commercial Building, now one of my new tenants wants me to make renovation as per him, like new tiled flooring, wiring, painting etc. Now as i'm renting this and will be charging my tenant GST, can i claim Input on these expenses i make specifically for this tenant, there maybe ocassion in future where this tenant may vacate and other person comes with new choices and again i have to undertake renovations, Its becomes a huge burden, can i calim ITC? if yes how, and if no why? as i read safari retreats Supreme court ruiling. Thanks for answering

Replies (2)

Quick Summary

If you're a landlord charging GST on commercial property rentals and undertaking tenant-specific renovations, claiming Input Tax Credit (ITC) can be complex. Generally, if these renovation costs are capitalised as part of the building, ITC is blocked under Section 17(5)(d) of the CGST Act. However, if treated as revenue expenses for routine repairs and maintenance, ITC is typically claimable. While the Safari Retreats Supreme Court ruling offered grounds for argument, recent amendments have narrowed this route, making it crucial to consult the current GST law and your accounting treatment.

Aashok Kumar Sharma

Finance/Compliance Consultant

70363 Points Posted on 19 September 2026

If renovation expenses (painting, wiring, retiling) are expensed in the Profit & Loss statement as repairs/maintenance, ITC can be fully claimed against GST on rental income under the CGST Act. If the expenses are capitalized in the balance sheet, standard GST rules block ITC under Section 17(5)(d), though the Supreme Court's Safari Retreats judgment provides grounds to argue eligibility under the "functionality test" if litigated. Treating these tenant-specific alterations as revenue expenses in accounting records is the cleanest, dispute-free way to claim ITC.

Tax Garden

Tax Consultant

2056 Points Posted on 24 September 2026

Short answer: mostly no, if the cost is capitalised.

Section 17(5)(d) blocks ITC on goods and services used to construct an immovable property on your own account, even if the property is rented out and you charge GST. "Construction" includes renovation, additions, alterations and repairs to the extent the cost is capitalised.

About Safari Retreats: the Supreme Court read the exception for "plant or machinery" using a functionality test. The Finance Act 2025 then amended 17(5)(d) retrospectively from 1 July 2017 to say "plant and machinery", which removes that route. Please check the current text before relying on either.

How to look at your spend:
- Flooring, wiring, painting, false ceiling that become part of the building and are capitalised: ITC blocked.
- Routine repairs that you expense in books, not capitalise: ITC is generally available.
- Movable items (loose furniture, standalone equipment not fixed to the building): not caught by the block.

Split the tenant fit-out bill by item type before booking it, so the movable and revenue portion does not get lost with the capital portion.

This [GST on commercial rent and ITC guide](https://taxgarden.in/blog/gst-on-rent-commercial-residential-rcm-itc-guide) covers the landlord side of rent and credit.