ITC ON GOVT WORKS CONTRACTOR

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Dear Sir

Govt PWD works contractor grant tender on constract of building now he will purchase some of material like cement iron steel etc... is this he is eligible to claim that itc,

why Because 17(5) what tells

Please clarify this
Replies (3)
You are a Works Contractor so for you materials purchased is an input and as per the Provision of Section 16(1) of the CGST Act 2017, ITC of inputs, input services and capital goods used in the "course of or furtherance of business" can be claimed.

Therefore you as a Works Contractor will be eligible to claim ITC on materials purchased provided that all the as laid down under Section 16(2) of the CGST Act 2017 is fulfilled.

Section 17(5) Says that "ITC is blocked in respect of works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service.

So, As in your case, it's for further supply of work contract, the ITC can be claimed.
So in case the input services are used for a factory employing 100 workers then it is allowed .


Factory is used for furtherance of business.
But in case , it's an apartment it won't be used but if same apartment is let out to an office.
I hope I am correct.
Thank you Sir


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