15/10/2024
𝐒𝐮𝐩𝐫𝐞𝐦𝐞 𝐂𝐨𝐮𝐫𝐭 𝐀𝐥𝐥𝐨𝐰𝐬 𝐈𝐧𝐩𝐮𝐭 𝐓𝐚𝐱 𝐂𝐫𝐞𝐝𝐢𝐭 𝐨𝐧 𝐂𝐨𝐧𝐬𝐭𝐫𝐮𝐜𝐭𝐢𝐨𝐧 𝐟𝐨𝐫 𝐑𝐞𝐧𝐭𝐚𝐥 𝐏𝐫𝐨𝐩𝐞𝐫𝐭𝐢𝐞𝐬: 𝐀 𝐋𝐚𝐧𝐝𝐦𝐚𝐫𝐤 𝐑𝐮𝐥𝐢𝐧𝐠.
The recent Supreme Court ruling (October 3, 2024) marks a significant development in the construction sector regarding the eligibility of Input Tax Credit (ITC) under GST. In the Safari Retreats case, the court held that businesses constructing immovable property (such as shopping malls) for renting or leasing purposes could claim ITC on construction expenses. This addresses the issue where ITC was previously blocked under Section 17(5)(d) of the GST Act.
The Court emphasized that the purpose of GST is to avoid the cascading effect of taxes. Since rental income is considered taxable under GST, denying ITC on construction would lead to double taxation, which is contrary to the principle of GST. The ruling allows such buildings to be classified as "plant" under GST law, thereby making them eligible for ITC. This is expected to significantly reduce the financial burden on businesses engaged in leasing commercial spaces.
This decision will benefit the real estate and construction sectors by promoting investment and reducing tax liabilities, especially for commercial properties used for renting.
Ramraje Bhosale
Maharera certified Real Estate Advisor
+91-9892357558
