ITC ON FACTORY BUILDING INSURANCE

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.

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. 

Yes, ITC is available. The block in Sec 17(5)(d) does not cover it:

• Sec 17(5)(c)/(d) block ITC on goods or services used for the construction of immovable property (including repairs that are capitalised). Insurance of an existing factory building is not "construction". It protects a business asset and is a revenue expense, not capitalised.

• Sec 17(5)(b) blocks insurance only for motor vehicles, vessels and aircraft (with exceptions) and for employee insurance (life/health) unless obligatory under law. Building and fire insurance are not listed.

• So ITC is allowed under Sec 16(1), since it is used in the course or furtherance of business.

• Practical conditions: invoice in the company's GSTIN, appearing in GSTR-2B; building used for taxable supplies. Reverse proportionately under Rule 42 if it is also used for exempt supplies.

• If part of the building is let out residentially or used personally, apportion.