ITC on payment of GST on the purchase of immovable property is not available to the buyer. The reason is that the buyer when pays GST for the purchase of immovable property, he is lawfully availing "services" as stated in Entry No. 5(b) of Schedule II of the CGST Act 2017 (provision below).
Now, there is a special provision for Blocking of the input tax credit called Section 17(5)(provision below), this provision lists the cases wherein a purchases of any goods or services cannot avail the ITC if such transaction is covered by Section 17(5). Now Section 17(5)(d) restricts the ITC of any goods or services received by a taxable person for construction of immovable property.
Thus, due to this restriction, you cannot avail the ITC of GST to be paid on purchase of immovable property from the builder.
Provisions
* Section 17. Apportionment of credit and blocked credits.-
(1) .....
(2) .....
(3) .....
(4) .....
(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:-
2[(a) motor vehicles for transportation of persons.....
(aa) vessels and aircraft ......
(ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa):.......
(b) 3[the following supply of goods or services or both-
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance:
.......
(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;
(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.
Explanation.-For the purposes of clauses (c) and (d), the expression "construction" includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;
.......
SCHEDULE II . of the CGST Act, 2017.
[ See section 7]
ACTIVITIES 1 [OR TRANSACTIONS] TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES
1. Transfer
.....
2. Land and Building
......
(3) Treatment or process
Any treatment or process which is applied to another person's goods is a supply of services.
(4) Transfer of business assets
....
5. Supply of services
The following shall be treated as supply of services, namely:-
(a) renting of immovable property;
(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.
Explanation. -For the purposes of this clause-
(1) the expression "competent authority" means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:-
(i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or
(ii) a chartered engineer registered with the Institution of Engineers (India); or
(iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority;
(2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure;
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