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ITC ON FACTORY BUILDING INSURANCE

2769 views 2 replies

shubham Mittal

Article Assistent

79 Points Posted on 24 January 2023

Hi,

Can we take ITC on factory building insurance.. if yes then please provide proper reference of section/ case law/Advance rulings etc.

Replies (2)

Quick Summary

The discussion examines whether ITC can be claimed on factory building insurance under GST. One view denies ITC on the ground that buildings are not inputs, while another argues that insurance is a revenue expense and not covered by the ITC restrictions under Section 17(5)(d) relating to construction of immovable property.

Aisha

Finance Professional

9489 Points Posted on 24 January 2023

GST Act defines inputs as goods or services used or intended to be used by a supplier in the course or furtherance of business. Factory buildings are not considered as inputs and therefore, ITC is not allowed on the insurance of factory buildings.

shubham Mittal

Article Assistent

79 Points Posted on 24 January 2023

Hi Aisha thanks for your suggestion.

But

As per Clause (D) of Section 17(5) of CGST Act, Goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

Explanation: the expression "construction" includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property.

In My opinion Building insurance is not a capital expenditure so that giving effect of above said section we can take ITC.