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INPUT tax credit admissibility on works contract

28 April 2022

Contractor will do civil,plumbing,sanitary ,painting to our Office Guest House. Is it a works contract? Not directly linked to factory. So,are we entitled to input tax credit on GST paid on consolidated bill? Please guide.

Also due to supply and services being different HSN/SAC, is 18% flat of varying Gst rate be applicable?

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5 Replies

Pankaj Rawat (GST Practitioner) (55032 Points)
Replied 29 April 2022

No ... you cannot , it's being disallowed in section 17(5).

Yes as per the Explanation Under clause (d) of section 17(5) , if such expenses is not capitalised & book as revenue expenditure , the ITC can be claimed.

Note : To book as revenue need to consider the nature of Expenditure & being allowed by you CA or otherwise objection will be raise during the Audit.

Jayanta Bandyopadhyay (229 Points)
Replied 29 April 2022

Sir

This is being treated as revenue spend. But it is Guedt House at City. Not within the proximity of plant. Not directly associated with production. Kindly advise.Civil,Plumbing,Painting as a composite works contract will cost Rs.13 Lakhs approx.

Rajendra Prasad (Employee Private) (1824 Points)
Replied 29 April 2022

As per section 17(5)(d), If the expenditure is used in the course of or furtherance of business, can avail Input Credit. Means if You are getting and revenue or sale Income against the said revenue expenditure only you are eligible.

Jayanta Bandyopadhyay (229 Points)
Replied 29 April 2022

Sir

It is Guest House meant for outstation employees, rarely for outside buyers. Difficult to appropriate spend between sales activity and internal purpose. Rgds,