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Gst on works contract

abhiram (student) (24 Points)

11 January 2020

can a contractor who provides civil works services take input credit on sand, bricks and other raw materials?

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14 Replies

Sivaramaraju G (Learner) (2398 Points)
Replied 11 January 2020

As per my knowledge you will be covered under works contract servides and you are barred from utilising credit on inputs

abhiram (student) (24 Points)
Replied 11 January 2020

So that means civil contracters cannot avail any credit on purchases made but have to pay on outward supplies?

Sivaramaraju G (Learner) (2398 Points)
Replied 11 January 2020

Yes.. Better wait for some more replies..

sabyasachi mukherjee (25988 Points)
Replied 11 January 2020

A devoloper cannot be a contractor.
However , a promoter can appoint a sub contractor who can easily carry out the work but be cannot take input tax credit of supplies.
refer sec 17(5)

Read clause c and clause d

1 Like

Pankaj Rawat (GST Practitioner) (55030 Points)
Replied 11 January 2020

Yes you can claim ITC .

ITC for works contract can be availed only by one who is in the same line of business and is using such services received for further supply of works contract service. For example a building developer may engage services of a subcontractor for certain portion of the whole work. The subcontractor will charge GST in the tax invoice raised on the main contractor. The main contractor will be entitled to take ITC on the tax invoice raised by his sub-contractor as his output is works contract service. However if the main contractor provides works contract service (other than for plant and machinery) to a Govt dept or to any other person who is not in same line of business , the Main contractor contractor can avail ITC on his inward supply but the govt dept or any person who is not providing further and acting as end user can claim ITC as block u/S 17(5)

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sabyasachi mukherjee (25988 Points)
Replied 12 January 2020

@ rawat
there are numerous illustrations .
I can send u videos or illustrated section if you want.
I had the same idea, but after going through the same I hv concluded it is not available.

Pankaj Rawat (GST Practitioner) (55030 Points)
Replied 12 January 2020

@ sabhyasachi

THE EXMAPLES GIVEN BY ME IS ONLY by CAREFULLy READING THE SECTION 17(5) & sorry I do watch any kind of vedeos.

Extract from Act :

"WC services when supplied for construction of immovable property (other than p&m) EXCEPT where it is an input service for further Supply of WC services."

Kindly check the Sentence after word EXCEPT it clearly states that is WC services is further supply input can be claimed, (even if itiis t supplied to end customer) let's understand it with illustrations of an CA is constructing his building for his office & hire contractor. in this case the contractor can claim ITC on his inward supply (As further supplied) & CA cannot claim ITC as it's against construction of Immovable property (Even though it's furtherance of business) .

So it's End User who is being block to take ITC on construction of Immovable property. Now if WC is constructing his building for his own use then he cannot claim ITC .

So it's better kindly read Bare Act carefully & plz do not watch videos as it misleads only.

Pankaj Rawat (GST Practitioner) (55030 Points)
Replied 12 January 2020

* I do Not watch

sabyasachi mukherjee (25988 Points)
Replied 13 January 2020

Videos are if of bare act....

Pankaj Rawat (GST Practitioner) (55030 Points)
Replied 13 January 2020

Still I prefer reading .......

Madhukar N Hiregange (Chartered Accountant) (38934 Points)
Replied 13 January 2020

The scheme of itc for either the main contractor or the subcontractor is the same.As long as wct service being provided and gst paid by both- both eligible for itc. The restriction is for the user of the immovable property.-

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sabyasachi mukherjee (25988 Points)
Replied 13 January 2020

@ but it should be used for the purpose of business...

Pankaj Rawat (GST Practitioner) (55030 Points)
Replied 15 January 2020

YES AGREE WITH SIR MADHUKAR N HIREGANGE .

(THATS WHAT I HAVE REPLIED)

sabyasachi mukherjee (25988 Points)
Replied 23 January 2020

All my answers are subject to the following:
the person who will taking input tax credit provided used for the purpose of business.
suppose A CONSTRUCTS 5 PROPERTY.
NOW HE INCORPORATED A COMPANY .
the company should hv two objectives
1. construction of house property.
2. renting
both should be mentioned in the objectives of the company.
Now he can claim for itc.
I mean to say this...