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

Which of the following inward supplies received by a registered company will have its input tax credit blocked under the CGST Act, 2017, with no exception applying on the stated facts?

Credit is blocked on works contract services for constructing a capitalised factory building on own account. A building is a civil structure excluded from plant and machinery, and the exception for further works contract supply does not apply here.

  1. AGoods received for construction of a plant and machinery foundation fixed to earth and used for outward supply
  2. BWorks contract services received to construct a factory building on own account, which is capitalisedCorrect
  3. CWorks contract services received as an input service for further supply of works contract service
  4. DMotor vehicle bought by a driving school for imparting driving training

Explanation

Works contract services for construction of an immovable property other than plant and machinery are blocked unless used as input for further works contract service. A factory building is a civil structure excluded from plant and machinery, so credit is blocked. The other three options fall within exceptions or are plant and machinery.

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