Input tax credit on swimming pool, Goods and Services Tax - GST

[vaibhav agrawal]

Hello,

Will ITC be available on construction of swimming pool in hotel or Water Park

Posts / Replies

[Sadanand Bulbule]

In terms of Section 17[5][d] of the CGST Act, ITC on construction of swimming pool, being immovable property, is blocked. Hence not eligible to claim ITC.

[YAGAY andSUN]

Yes, Input Tax Credit (ITC) under GST is generally available on the construction of a swimming pool in a hotel or water park, subject to certain conditions. Here’s how ITC applies in such cases:

1. ITC Availability for Hotels and Water Parks:
   • If the swimming pool is being constructed as part of the business activities of a hotel or water park, and the pool is intended to be used for making taxable supplies (e.g., providing services to customers for a fee), then ITC on construction-related expenses may be available.
   • In the case of hotels or water parks, the swimming pool would typically be considered a part of the amenities provided to customers, which forms a part of the taxable service. Since the construction is for business purposes, it is eligible for ITC on inputs and input services used in the construction.
2. Block Credit Restrictions:
   • However, there are restrictions under Section 17(5) of the CGST Act. ITC cannot be availed on the construction of "immovable property" for personal use or for purposes not related to business. This means that if the swimming pool is intended for personal or non-business use (e.g., a pool built in a residential property), ITC would not be available.
   • Additionally, for GST purposes, a swimming pool is considered an immovable property. But as long as it is for business use, particularly in the case of a hotel or water park, ITC would typically be available on inputs like cement, construction materials, and services related to the construction of the pool.
3. Use of the Swimming Pool:
   • If the pool is used for providing taxable services (e.g., entry fees for customers, providing facilities to guests), the expenses related to its construction will be eligible for ITC as part of the overall taxable business activity.

In conclusion, ITC on the construction of a swimming pool in a hotel or water park will be available, provided the pool is used for business purposes and generates taxable income. It’s important to ensure proper documentation and adherence to GST compliance rules when claiming ITC.