Legal provision on whether we can get Input Tax Credit on Repairs and Renovation of Buildings:

The Chairman / Secretary,

Saket CHSL,

Thane.

Dear Sirs,

I am giving herewith the legal provision on whether we can get Input Tax Credit on Repairs and Renovation of Buildings:

One cannot  take ITC  on repairs and maintenance  work of the society buildings as per the section 17 sub section 5 (d)   of the CGST Act  2017 .

If the repair results in capitalization of such expense, then you cannot claim ITC. 

If repair is charged to Profit & Loss A/c,  then ITC can be claimed. The above provisions apply only when such repairs are done for business. If repairs are personal in nature, then ITC is ineligible.

What does the Law say?

Let us read what the law has to say about Section 17(5)

Notwithstanding anything that sub-section (1) of section 16 and subsection (1) of section 18 contains, ITC will not be available in respect of the following,
namely:

• motor vehicles and other conveyances apart from when they are used–

1. for transporting the goods; or
2. for making the following taxable supplies, namely:
   1. further supplying such vehicles or conveyances; or
   2. transporting the passengers; or
   3. imparting training on driving, navigating, flying such vehicles or conveyances;

• the following supply of goods or services or both—

1. food and beverages, beauty treatment, cosmetic and plastic surgery, health services, outdoor catering, except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
2. membership of a club, health and fitness centre;
3. rent-a-cab, life insurance and health insurance except where––

1. the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or
2. such inward supply of goods or services or both of particular categories is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply; and
3. travel benefits extended to employees on vacation such as leave or
   home travel concession;

• works contract services when supplied for construction of immovable property (other than plant and machinery) except where it is an input service for the further supply of works contract service;
• goods or services or both received by a taxable person for construction of immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

Explanation

For clauses third and fourth, the expression “construction” includes reconstruction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;

• goods or services or both on which tax has been paid under section 10;
• goods or services or both received by a non-resident taxable person except on goods imported by him;
• goods or services or both used for personal consumption;
• goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and
• any tax paid by the provisions of sections 74, 129 and 130

1. Section 74 provides for the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised because of fraud or any wilful misstatement or suppression of fact.
2. Section 129 deals with the detention, seizure and release of goods and conveyances in transit and the tax paid in this procedure
3. Section 130 deals with the confiscation of goods or conveyances and levy of penalty

Supplies on which ITC is not applicable

• Motor cycles and other conveyances
  ITC is available on motor cycles and other conveyances only when they are used for making the following taxable supplies

1. Further supply of such vehicles or conveyances
2. Transportation of passengers
3. Imparting training on driving, flying, navigating such vehicles or conveyances
   So, apart from the exceptions, ITC cannot be availed on purchase of motor cycles and other conveyance. ITC can be availed when these are used for transportation of goods for either self or some other recipient.

• Specific goods and / or services or both
  ITC will not be available to a registered person for the following receipt of goods or availment of services or both:

1. Food and beverages
2. Outdoor catering services
3. Beauty treatment
4. Health services
5. Cosmetic and plastic surgery services
   ITC will be available on the above when an inward supply of goods and / or services or both of the abovementioned categories is used for making an outward taxable supply of goods and/or services or both or as an element of taxable composite or mixed supply

• Membership of a club, health and fitness centre
  ITC cannot be availed on tax paid for membership of club, health and fitness centre under any circumstances. This restriction is absolute, and there is no exception.
• Rent cab, health insurance, life insurance: ITC shall not be available to registered persons on renting a cab, life and health insurance supplies received by it. This restriction is not absolute. ITC will be available where the government notifies the services which are obligatory for an employer to provide to his employees for the time being in force. Also, where such an inward supply of goods and services or both of a particular category is used by a registered person to make an outward taxable supply of the same category, or when it is used as a part of composite mixed supply, ITC is allowed. Also, The ITC on the supply of above services is allowed when it is paid on account of travel benefits extended to employees on vacation such as leave travel concession
• Works contract services when supplied for construction of immovable property: ITC not available to a registered person for the tax paid on the inward supply of works contract services used for the construction of immovable property. This is not applicable to the construction of plant and machinery. Where it is input used for further supplying of a works contract service, ITC is available.
• Goods and / or services or both on which tax has been paid u/s 10
• Goods and / or services or both received by a non-resident taxable person except on goods imported by him
• Goods or services or both used for personal consumption
• Goods lost, stolen, destroyed, written off or disposed off by way of gift or free samples.
• ITC shall not be available to a registered person on any tax paid by the provisions of section 74, 129 and 130.

I have tried to be as lucid and simple in explaining.

Hope it gives a clear picture.