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ITC for developers

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Gangeshwar

proprietor

121 Points Posted on 02 March 2022

Dear All,

One Company having business of developing colonies and giving on rent the flats till the time they are sold off. Now the query is whether ITC on construction materials etc. be available against the rental income.

Your advise with related case law(if any) willl be highly appreciated.

Replies (5)

Quick Summary

This discussion explores whether developers can claim Input Tax Credit (ITC) on construction materials for properties they rent out before selling. While Section 17(5)(d) of the CGST Act generally blocks ITC on immovable property, the question arises if renting out constitutes an output supply subject to GST. Initial advice suggests ITC is blocked, but further clarification is sought on whether rental income, taxed under GST, makes ITC claimable. The consensus leans towards reversing previously utilised ITC due to the strict interpretation of the law.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121521 Points Posted on 02 March 2022

No. The ITC over the building/ property is blocked u/s. 17(5) of CGST act...

koti chunduri

46 Points Posted on 02 March 2022

If, I am correct, u r eligible for ITC, if the rental income on such property is shown in output turnover and pay tax there on under GST @ 18%.

Gangeshwar

proprietor

121 Points Posted on 02 March 2022

Sir,

Here, we are not using the developed properties. Ultimately, flats and duplexes will be sold off but presently they are let out. Will still Section 17(5)(d) of CGST apply.

Please Sir, is there any option to avail ITC.....since we have been utilising ITC since last 2 years and now the consequence will be huge.....So sir, please suggest any way out.

Thanks Sir