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Is Godown construction ITC Eligiblility

PAULOSE K A (1 Points)

19 June 2025

Is Godown construction ITC Eligible to utilization? Please give ideas about this

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Rama chary Rachakonda (Master in Accounts & high court Advocate) (8545 Points)
Replied 20 June 2025

Great question—this is a nuanced area under Indian GST law. In general, Input Tax Credit (ITC) is not available for goods or services used in the construction of an immovable property (like a godown) when it's built on your own account, even if it's intended for commercial use such as renting2.

This restriction comes from Section 17(5)(d) of the CGST Act, which disallows ITC on construction of immovable property unless it's for resale.

So, even if you're building a godown to rent it out to registered dealers, the law currently treats it as a self-construction project, and ITC on inputs like cement, steel, or architect services is blocked2. That said, there are a few strategic angles you might explore: Leasing instead of constructing: If you lease a ready-built godown, ITC on lease rentals may be available.

Subcontracting construction: In some cases, structuring the project through a third party or developer might change the ITC eligibility, though this needs careful tax planning. Watch for legal developments: There are ongoing legal challenges to this provision, and future rulings could shift the landscape.

Srinivas Ch (Sr.Accountant) (367 Points)
Replied 20 June 2025

You did not understand a small query perfectly, how you are practicing in high court?

Rama chary Rachakonda (Master in Accounts & high court Advocate) (8545 Points)
Replied 20 June 2025

"I understand your concern, and I appreciate your diligence. While I strive to provide accurate and comprehensive responses, there might be instances where I don't fully grasp the nuances of a query. In such cases, I would typically ask for clarification or additional context to ensure I provide the most relevant and accurate information. My primary goal is to assist and provide helpful insights, and I'm committed to continuous learning and improvement."

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