2026-VIL-27-AAR
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SGST Advance Ruling Authority

GST – Tamil Nadu AAR - Admissibility of Input Tax Credit on Construction of Immovable Property for Rental Purposes - The applicant is engaged in the business of constructing commercial buildings and leasing them out to various tenants - Whether the applicant is eligible to claim ITC on goods and services used for the construction of an immovable property (commercial building) which is intended to be used for the purpose of letting out on rental basis – HELD - The provisions of Section 17(5)(d) of the CGST Act, 2017 blocks the ITC in respect of goods or services received for construction of an immovable property (other than plant and machinery) on the taxable person's own account, even when used in the course or furtherance of business. The construction of a mall or commercial complex would fall under the category of an 'immovable property' and not 'plant and machinery', and hence, the restriction under Section 17(5)(d) would apply – Further, the recent amendment to Section 17(5) to replace the phrase 'plant or machinery' with 'plant and machinery', with retrospective effect from July 1, 2017, effectively settles the issue and precludes the interpretation of a building as 'plant' for the purposes of ITC. The phrase 'on own account' in Section 17(5)(d) should be interpreted to include construction intended for leasing out, and hence, the applicant is not eligible for ITC on the construction of the commercial building - The applicant is not eligible to claim Input Tax Credit on goods and services used for the construction of an immovable property (commercial building) which is intended to be used for the purpose of letting out on rental basis – Ordered accordingly
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