ITC on loan processing charges

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Consultant
423 Points Posted on 30 May 2020
dear experts,
M registered in GST as commercial property renting services provider.

I have purchased commercial property for let out purpose.
the property is purchased from bank loan and bank has charged GST on loan processing charges.

can I claim the ITC on loan processing charges against the GST payable on renting charges.??

thanks
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On 30 May 2020 at 11:29 Report
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Quick Summary
This discussion explores whether businesses registered for GST on commercial property rentals can claim Input Tax Credit (ITC) on GST charged on bank loan processing fees. While loans are often linked to immovable property, which has specific ITC restrictions, the consensus is that if the loan is essential for your business operations and the rental income is taxable, you can likely claim the ITC. It's advised to check if the processing charges are capitalised to the property, as this may affect eligibility.

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4 Points Posted on 30 May 2020
Yes you can take the itc
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On 30 May 2020 at 12:50
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Ca Article
354 Points Posted on 30 May 2020
It is not provided anywhere in the Act whether you can take ITC on Bank loan processing charges.
But the act specifies some case under Section 17(5) which are ineligible for ITC and Interest on bank loan processing charges is not given there.

Therefore you can take the ITC on the same, as taking loan for the purchase of Commercial property is essential to carry out your business.

Thanks
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On 30 May 2020 at 19:19
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Consultant
423 Points Posted on 30 May 2020
Thanks for your reply,
my thought behind this question is the loan is taken for immovable property and section 17(5) blocked credit for any goods or services related to immovable property.
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On 30 May 2020 at 19:54
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GST Practitioner
55067 Points Posted on 30 May 2020
But the immovable property is going to let out (rented) & rental Income from commercial property is taxable in GST.

So in term of Section 16 the ITC can be claimed as it is in course of business.


Note : For repair expenses on Account of Immovable property the ITC is available , So if the Loan processing charges is not capitalise to Immovable Property the ITC is available.
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On 30 May 2020 at 23:15

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