As per Section 16 of the CGST Act 2017, a taxpayer is allowed to avail Input Tax Credit only if such goods or services are used in course of furtherance of the business along with certain other conditions. On the other hand Section 17(5) restricts ITC on certain goods & services & is thus ineligible.
On a combined reading of the above two sections, following inferences have recently been drawn by the Authority for Advance Ruling (Uttar Pradesh):
- Whether Input tax credit (ITC) is available in relation to building works like cement, iron, sand and payment towards labour contract?
“Input tax credit on building works is not available as credit in respect of civil structure and goods and services used for construction of immovable property is restricted u/s 17(5) of the CGST Act.”
2. Whether ITC is available in relation to electrical and air conditioning works?
“Electrical items, fittings and air conditioning equipments after installation becomes a part and parcel of the immovable property since immovable property includes things attached to the earth, or fastened to anything attached to the earth & ITC in relation to immovable property is not available as per Section 17(5). Thus, input tax credit on electrical and air-conditioning works is not available.”
3. Whether Input tax credit (ITC) is available in relation to fire protection work/system?
“Input tax credit is not available on fire protection system / work as it does not fall under the definition of plant and machinery. Plant and machinery means apparatus, equipment and machinery attached to the earth.“
4. Whether Input tax credit (ITC) is available in relation to mechanical works like plumbing, sewage system and water system?
“Mechanical works form an integral part of building or any other civil structure & ITC in relation to building or any other civil structures is not available as per Section 17(5) of the CGST Act.“
5. Whether ITC is available on gardening water supply system?
“Input tax credit is not available on gardening water supply system as it is not used in the course or furtherance of business.“