Question ID :
31746
Clarification on GST (ITC) on Construction Activity
“In case of builder, who has received the consideration for sale of flats before 01.07.2017 and paid service tax on it, whether any GST input would be available on inward supply of goods or services or both, or inward supply of works contract service, for construction of the flats? The construction is being done after 01.07.2017.”
Also, in the case mentioned above, will the position change in case the flats rather than being sold have been allotted on lease hold basis?
Early response will be highly appreciated.
Posted by
Neeraj Bansal
on
Jul 24, 2018
Filed Under
GST
To my view you will have to comply with Section 142(11)(c) since the construction is post GST whereas you have made the payment of ST before 01.07.17.
Hence you will have to take credit of the ST paid under Transitions Provisions in TRAN1 and then pay GST on the same. And yes in this situation ITC shall also be applicable.
In case flats are being given on lease, my view is in that case its construction for own purpose and therefore the credit will be blocked under section 17(5)(d)
Posted by
Avinash Poddar on
Jul 24, 2018
Answer ID :
70875
My view is
In your case Section 142(11)(c) shall be applicable. You have collected and deposited ST before 01.07 but have started construction post 01.07.
So you need to take credit of ST paid as per transitional provisions by filing TRAN1 and must pay GST post 01.07. And yes you will be eligible to claim ITC of GST also.
In case you opt to give on lease, I am afraid that will be considered as constructed for own use and hence the credit will be blocked as per Section 17(5)(d).
Posted by
Avinash Poddar on
Jul 24, 2018
Answer ID :
70876
Credit of tax paid under earlier laws was allowed under section 140(1) and 140(3) of CGST Act. But the time limit for claim those credits is passed, hence, no further opportunity to avail VAT or ST credit is allowed again under GST law.
Credit on inward supply of construction services is available only for making outward supply of construction services in GST. Hence, if the property is being constructed for lease and not sale, credit is NOT allowed.
Posted by
CA. JATIN CHRISTOPHER A on
Jul 25, 2018