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Gst on construction

18 September 2018

Dear All,

Suppose a contractor provides construction & repairing service of house and commercial buildings

He provides service in two ways .

1.Either provide lumpsum quote to client and he himself purchases material and provides labour then he is eligible to get input tax credit paid on materials like cement, bricks and steel etc.

2.if only provides only labour service to client and client himself makes the purchase then he is eligible for other input tax credit?

Rate of gst on construction service and suppose he provides service to registered in GST (B2B) then purchaser can cailm the input tax credit?

Kindly guide me and thanks ..

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5 Replies

Pankaj Rawat (GST Practitioner) (55032 Points)
Replied 19 September 2018

1. Yes he is eligible to claim ITC

2. Only Labour Services : As per Notification 12/2017 CT (r) under s.no.10 is Exempted. So as per section 17(2) he is not eligible take ITC

Rate of construction services is 18%

In Case supplier of service : ITC can be claim is not depend upon to whom its being provided.
if he is providing exempted services only cannot claim ITC , if providing Taxable services can claim ITC

ITC for Work contract services can be avail by Recepient only if He is in same line business, like Builder, Contractor , sub contractor

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RAKESH R AGRAWAL (ARTICLE) (29 Points)
Replied 20 September 2018

Dear Pankaj sir, Thanks..I am agree with your second answer. But still have doubt on first question as construction contracts are covered in works contracts services and in works contract supplier is not eligible for input tax credit? Am I right sir? Any suggestions or advice sir?