Query realted to Input Tax Credit

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Rickter Hashimov

21 Points Posted on 13 February 2024

Hello everyone, i am a newbie to input tax credit. My question is as follows: I am going to start a new construction project under a Builder. I and the builder has come into terms in constructing a apartment within a certain amount. The builder will himself notprocure any raw materials or do any work but will provide me the necessary fund for supervising and constructing the apartment. He will pay the amount through rtgs and has said that i will pay the gst on the raw materials i will purchase for completing the project. After finishing, i will handover the project to the builder and he will sell the apartment in the market. My role is limited to completing the construction only. As far as i understand only a builder is eligible for claiming the input tax credit on the materials he has purchased. But in my case the builder has not purchased any raw materials, in fact i have purchased all the raw materials for him and after completing i will only handover the project and not sell it to him. Will i be able to get any itc benefits as i have paid gst. If there is a way can anyone explain how it can be done?

Replies (2)

Quick Summary

A new participant in construction is seeking clarification on claiming Input Tax Credit (ITC) for a project where they purchase raw materials and manage construction, while the builder provides funds and handles sales. The core issue is whether ITC can be claimed when the builder doesn't directly procure materials. Advice suggests the individual is acting as a subcontractor and cannot directly claim ITC, but these costs, including GST, can be incorporated into their invoice as part of the construction cost. The builder would then be liable for GST on their labour services.

Saravanan nagaraj

332 Points Posted on 13 February 2024

As per agreement, you are a sub contractor can't avail input tax credit. But, your purchase + tax added as a cost of the project. So, you can collect these input tax on your invoice per sq ft cost of construction. You won't lose these tax amount.

You can charge tax on your labour services @ 18% which will be paid by builder.

Work out your project cost then sign agreement. Opt chartered accountant or cost accountant service.

Kishor Lulla

656 Points Posted on 13 February 2024

The query is not simple. there can be various ifs and buts. have to discuss from various angels. I have 50 clients of builders . mail lullakishor @ gmail.com