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CS Executive · Tax Laws and Practice · Input Tax Credit and Computation of GST Liability

Ashoka Builders Ltd, a registered real estate developer, buys cement and hires contractors to construct an office building on its own land. The building will be capitalised and used as its own head office. It is not plant and machinery. Credit on the goods and services received for this construction is:

Credit is not available. Section 17(5)(d) blocks input tax credit on goods or services received for constructing immovable property, other than plant and machinery, on the taxpayer's own account, even when used in the course or furtherance of business.

  1. AAvailable, since used in the course of business
  2. BAvailable only on the services, not the goods
  3. CAvailable in proportion to the depreciation claimed
  4. DNot available, since it is construction of an immovable property on own account other than plant and machineryCorrect

Explanation

Section 17(5)(d) blocks credit on goods or services received for construction of an immovable property (other than plant and machinery) on own account, even if used in the course or furtherance of business. The building here is not plant and machinery. Option A is wrong because the clause applies notwithstanding business use.

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