DOUBT ON WORKS CONTRACT INPUT, Goods and Services Tax - GST

[RV PERUMAL]

ONE BUILDER CONSTRUCT A HOUSE TO A. THE BUILDER PURCHASE GOODS AND PROVIDE THE SERVICES LIKE MASONARY, CARPENTARY, ELECTRICIAN AND ALL OTHER RELATED SERVICE WORKS FROM THEIR OWN LABOURS AND MAN POWER AND NOT RECD ANY SERVICES FROM OUT SIDE REGARDING THIS CONSTRUCTION.

MY QUESTION IS WHETHER THE BUILDER IS ENTITLED TO CLAIM THE ITC AND AVAIL THE ITC? BECAUSE OF SEC.17(5) (c) 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;

Posts / Replies

[Padmanathan Kollengode]

RV Perumal sir,

Yes. In my view, the Builder is eligible to avail and utilize ITC on goods used (as you mentioned there is no input services) in rendering the works contract service.

In this case, applicability of section 17(5)(d) is more appropriate to be discussed and not section 17(5)(c) since the builder is not availing ITC on "works contract service" which is covered under clause (c). Section 17(5)(d) reads as:-

(d) 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.

In this case, the builder is receiving the goods for construction of immovable property BUT the construction is not on his own account. The construction is on account of his client.

Therefore, the above restriction will not apply to the builder and he can avail and utilize the ITC subject to conditions in section 16.

[Shilpi Jain]

Credit would be eligible. Hope the tax paid on this transaction on the amount received from the customer is @ 18%.