ITC on contruction materials

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HITENDRA PAWAR

STUDENT

35 Points Posted on 28 January 2020

Whether a civil contractor can claim Input Tax Credit on construction of immovable property. like ITC on cement bill, and other material purchased for completion of project.?????

Replies (4)

Quick Summary

This discussion clarifies the rules around claiming Input Tax Credit (ITC) on construction materials for civil contractors and promoters. Generally, ITC on the construction of immovable property is not allowed, especially if built for self-use. However, if the immovable property is sold before completion (and taxed), or if a contractor uses the input service for further works contract services, ITC may be claimable. The key distinction is whether the construction itself falls under a 'works contract' where ITC is typically restricted, unless it's for onward supply.

Anup Agarwal

529 Points Posted on 28 January 2020

Yes a promoter can claim ITC related to same.

but in the case when immovable property shall be sold before construction (with tax)

Roshni

Studwnt

730 Points Posted on 28 January 2020

Only restriction is if constructed for self then no itc

HITENDRA PAWAR

STUDENT

35 Points Posted on 23 July 2020

Ma'am Please help me to understand this..The confusion is all about if building a immovable property comes under works contract then ITC can not be claimed correct me if i am wrong.

"Works contract

For example, XYZ Contractors are constructing an immovable property. They cannot claim any ITC on the works contract. However, XYZ hires ABC Contractors for a portion of the works contract. XYZ can claim ITC on the GST charged by ABC Contractors."

HITENDRA PAWAR

STUDENT

35 Points Posted on 23 July 2020

Thank you for your comment sir,

also guide me in this...

The confusion is all about if building a immovable property comes under works contract then ITC can not be claimed correct me if i am wrong.

"Works contract

ITC shall not be available for any work contract services. ITC for the construction of an immovable property cannot be availed, except where the input service is used for further work contract services. For example, XYZ Contractors are constructing an immovable property. They cannot claim any ITC on the works contract. However, XYZ hires ABC Contractors for a portion of the works contract. XYZ can claim ITC on the GST charged by ABC Contractors."

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