FICCI, Assocham seek input tax credit under CGST on commercial properties meant for leasing purposes

PTI New Delhi

Industry bodies FICCI and Assocham have demanded that real estate developers should be allowed to claim Input Tax Credit (ITC) under the Central Goods and Services Act (CGST) on commercial assets constructed for leasing purposes. The associations have written letters to the finance ministry and have urged the latter to permit availing of the ITC where the immovable property is constructed for the provision of leasing services.

They have argued that the potential revenue impact would not be high by allowing ITC and instead, this would help maintain the credit chain, besides spurring growth in the real estate sector and the overall economy. The representations come in the backdrop of a recent Budget proposal relating to a retrospective amendment to the CGST law, which experts feel will override the Supreme Court ruling related to the ITC claim on leased assets.

Market consultants are of the view that this move is likely to adversely impact real estate companies seeking input tax credit on the construction and leasing of commercial assets like office complexes, shopping malls and warehousing parks.