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ITC on goods in works contract

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Laltha Zuala

137 Points Posted on 19 February 2021

Can ITC be claimed for the contractor on his purchases which are utilised for carrying out his works contract?

1. Exacavators
2. Tipper trucks
3. GI sheets which are used for barricading the site from public reach.
4. Other masonry tools

I would be very pleased if you can answer me point by point.

Replies (2)

Quick Summary

This discussion clarifies whether Input Tax Credit (ITC) can be claimed on capital goods purchased by a contractor for use in a works contract. The consensus is that items like excavators, tipper trucks, and GI sheets used for site barricading are eligible for ITC, as they are capital goods and no specific restrictions apply under Section 17(5) of the CGST Act.

CA Subba Reddy Bonam

Practising chartered accountant

354 Points Posted on 19 February 2021

Dear ,

All the items / goods mentioned are of capital goods in nature.

According to section 2(19) of the CGST Act Capital Goods means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business.

Further there is no restriction on the above items in Section 17(5).

Hence, all the goods mentioned are eligible for availing ITC.